The central bank has intensified its intervention in the foreign-exchange market, increasing direct purchases of US dollars from commercial banks to stabilise the Taka amid a surge in remittance inflows ahead of Eid-ul-Fitr.
Officials say the move is aimed at absorbing excess foreign-currency liquidity on the market, preventing undue volatility in the exchange rate while gradually strengthening the country's reserve position.
As part of the ongoing mop-up operation, the Bangladesh Bank purchased an additional US$105 million from seven banks through an interbank spot market auction on Thursday.
The amount was bought under the Multiple Price Auction method, with a cut-off rate of Tk 122.30 per dollar, according to central bank officials.
The latest intervention in the foreign exchange (forex) market came amid stronger inward remittance inflows during the first 18 days of the current month ahead of the Eid-ul-Fitr festival.
Remittance inflows grew by 27.53 per cent to $2.13 billion during February 1-18 this year, up from $1.67 billion in the same period last year.
Earlier, on February 18, the central bank purchased another $109 million through auction from eight banks in the interbank spot market on similar grounds.
Bangladesh Bank has so far bought $5.26 billion directly from banks since July 13 under the prevailing free-floating exchange rate arrangement, according to its latest data.
"We're mopping up the surplus inflow of foreign currency by increasing our purchases of US dollars from banks," a senior Bangladesh Bank official told The Financial Express while explaining the latest market situation.
Higher remittance inflows ahead of Eid, coupled with lower import payment obligations, have recently increased the foreign exchange surplus, the official said.
He added that such intervention helps maintain stability in the exchange rate of the US dollar against the Taka, which in turn encourages exporters and remitters.
"The ongoing intervention is also contributing to a gradual strengthening of the country's foreign exchange reserves," the official noted.
Meanwhile, Bangladesh's gross forex reserves rose to $34.78 billion on 19 February this year from $34.54 billion on 17 February, according to the central bank's traditional calculation method.
Under the International Monetary Fund (IMF)'s Balance of Payments and International Investment Position Manual, sixth edition (BPM6), the reserves stood at $30.06 billion during the period under review, up from $29.86 billion.
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