BB continues to intervene in forex mkt

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FE Report
The Bangladesh Bank (BB) continued its open market intervention Tuesday by extending foreign currency support to the commercial banks, which need to finance increased imports of food grains and fuel oils.
The central bank has been taking the move to keep the country's foreign exchange market stable and help the banks make payment of import bills of some selective items, officials said.
"Our support will continue as long as there is a demand for foreign currency in the market," a BB senior official told the FE Tuesday.
He also said the central bank will provide such facility to the banks on a priority basis to help settlement of import bills, particularly that of food grains and petroleum products.
Under the measures, the central bank sold at least US$25 million at market rate directly to four commercial banks Tuesday to meet the growing demand for the greenback.
Interbank foreign exchange dealers quoted single rate for the US dollar at Tk 68.58 Tuesday. The current rate is being quoted for about a month now.
"The pressure on foreign exchange market may continue in the near future due mainly to increased imports, particularly essentials and petroleum products," a senior treasury official of a private commercial bank told the FE.
Meanwhile, the overall opening of fresh letters of credit (LCs) against imports almost doubled in January last against the corresponding period of the previous year because of higher import trend of food grains and gasoline products.
The import LCs worth US$ 2.241 billion were opened during the period as against $1.163 billion of the same period of the last year, according to the central bank statistics, released recently.
"The inter-bank foreign exchange market is still stable because of intervention by the central bank," the treasury official observed.
Meanwhile, the inter-bank call money rate eased slightly Tuesday despite withdrawal of cash through government bonds, fund managers said.
The call rate in extreme range fluctuated between 8.00 per cent and 14.00 per cent against previous day's range of between 8.00 per cent and 15.00 per cent.
The rate, however, fluctuated between 8.00 per cent and 12.00 per cent in most deals against previous day's 8.00 per cent and 11.00 per cent reflecting increased pressure on liquidity, they said.
The call rate moved above normal level, as some commercial banks and financial institutions borrowed cash at high rates in stray deals to meet urgent requirements of their clients, fund managers said.
The central bank withdrew cash through fifteen-year Bangladesh Bank Government Bonds amounting to Tk 1.00 billion, including Tk 682.50 million against seven bids and Tk 317.50 million devolved to primary dealers, on the day at an annual interest rate of 12.22 per cent.