After a six-week pause, Bangladesh Bank has resumed dollar purchases, signalling renewed intervention to stabilise the exchange rate of the US dollar against the local currency stable amid a surge in remittance inflows.
The central bank purchased $70 million from a bank in the interbank spot market on Wednesday.
The amount was bought through an auction from a Shariah-based bank under the Multiple Price Auction method, with the cut-off rate set at Tk 122.75 per dollar, according to central bank officials.
Earlier, on March 2, the central bank purchased $25 million from two scheduled banks in a similar auction, with the cut-off rate at Tk 122.30 per dollar. The Bangladesh Bank's (BB) latest intervention in the foreign exchange (forex) market came amid stronger inflows of inward remittances during the first 14 days of the current month.
The flow of inward remittances grew by more than 25 per cent to $1.61 billion during April 1-14 this calendar year, up from $1.28 billion in the same period last year.
"We've purchased US dollars from a bank to keep the exchange rate of the dollar against the Bangladesh Taka (BDT) stable by offsetting higher remittance inflows," a senior BB official told The Financial Express (FE), explaining the latest market situation.
The central banker also said a stable exchange rate is essential for both exporters and remitters.
The central bank of Bangladesh has so far bought $5.56 billion directly from banks since July 13 last year under the prevailing free-floating exchange rate arrangement, the central bank's latest data showed.
Such intervention is also contributing to a gradual strengthening of the country's foreign exchange reserves, according to the central banker.
Meanwhile, Bangladesh's gross forex reserves rose to $34.87 billion on April 15 this calendar year from $34.66 billion on April 13, as per the central bank's traditional calculation.
Under the International Monetary Fund (IMF)'s Balance of Payments and International Investment Position Manual, sixth edition (BPM6), the forex reserves stood at $30.20 billion during the period under review, up from $29.98 billion. Market operators, however, welcomed the BB's latest intervention in the forex market, saying it would help keep the exchange rate stable despite ongoing geopolitical tensions.
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