Higher import costs pressing foreign exchange market

Siddique Islam | Published: June 12, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

Pressure on the foreign exchange market has been continuing due to higher import costs of essentials and gasoline despite intervention by the central bank.

The Bangladesh Bank (BB) has continued its intervention in the inter-bank foreign exchange market by selling US dollar directly to the commercial banks aiming to keep the market stable, officials said.

As part of the move, the central bank sold US$4.0 million at the market rate to two commercial banks Wednesday to meet their demand for the greenback.

"We have provided such facilities to the commercial banks to help settlement of import payment bills for essential items including food grains and petroleum products," a BB senior official told the FE Wednesday.

He also said at least $30 million may be injected in the inter-bank foreign exchange market today (Thursday) to settle the import payment bills for petroleum products.

"More funds have been poured in the foreign exchange market due to price hike of the essential items including fuel oils in the international markets," the official observed.

Treasury officials of the commercial banks, however, acknowledged the BB's official view, saying that the higher prices of petroleum products and food grains are mainly responsible for such pressure on the market.

"We have to provide more funds to settle import payment bills for petroleum products because of prices of the fuel oils rising over 60 per cent in the last one year," a senior treasury official of a commercial bank told the FE.

The flow of inward remittances and export earnings will be strengthened to minimise the gap between inflow and outflow of the foreign exchange in the market, he suggested.

The US dollar was quoted at Tk 68.50-Tk 68.53 in the inter-bank foreign exchange market on the day, unchanged from the previous working day, market operators said.

The BB started intervention in the inter-bank foreign exchange market through selling of the US dollar from October 29 last year and it helped the local currency appreciate against the US dollar.

The central bank has since sold over $720 million to the commercial banks as part of its intervention in the market, the officials confirmed.