Taka appreciating against USD

FE Team | Published: October 30, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Siddique Islam
Bangladesh Taka (BDT) has started appreciating against the US dollar following intervention by the central bank in the foreign exchange market.
The Bangladesh Bank (BB) took the move against the backdrop of a rising trend of the greenback against the local currency due mainly to the recent rush in settlement of import bills. The US dollar has, however, been shedding value in the international market against all other major global currencies.
"We will continue to intervene in the market if necessary," a BB senior official told the FE Monday, adding that the central bank is closely monitoring the overall market situation.
Under the move, the BB sold US$65 million at a rate of Tk 68.68 to eight commercial banks Monday to meet the growing demand for the greenback in the inter-bank foreign exchange market.
The local currency appreciated by 0.04 per cent against the US dollar on the day and this trend is likely to continue if the central bank intervenes in the market regularly.
The US dollar was quoted at Tk 68.68 in the inter-bank foreign exchange market on the day against Tk 68.70-Tk 68.71 in the previous day, market sources said.
The central bank has started intervening in the market when the country's foreign exchange reserve touched $5.40 billion. However, the reserve might decline slightly by the first week of November due to a regular payment to the Asian Clearing Union (ACU).
"It is the proper step by the central bank to bring normalcy in the foreign exchange market that will also help the local currency appreciate against the greenback slowly," a senior treasury official of a nationalised commercial bank (NCB) told the FE.
The Indian rupee appreciated by around 13 per cent recently against the US dollar due to increase in the flow of foreign exchange to the country.
As on October 17, exchange rate of the Indian rupee against dollar was at 39.68 rupees. It was 45.36 rupees few months back against the US dollar.
Sources, however, said the rise in settlement of letters of credit (LC) against imports, especially food grains, edible oils and petroleum products, opened mainly before the holy month of Ramadan, created a fresh pressure on the country's inter-bank foreign exchange market.
Opening of fresh LCs against imports rose by 23.35 per cent in the first quarter of the current fiscal over that of the corresponding period of the previous fiscal.
The import of LCs worth US$ 5.224 billion were opened during July-September period of the current fiscal against $4.235 billion of the corresponding period of the previous fiscal, according to the central bank statistics, released recently.
A large quantity of essential commodities, particularly wheat, pulses, onion and edible oils, was imported to meet the growing demand of consumers during the holy month of Ramadan.
In another development, the central bank has increased the amount of export development fund (EDF) to $150 million from $100 million earlier aiming to boost export.
Besides, the limit of such loan for single exporter has been raised to $1.50 million from $1.0 million against back-to-back letters of credit (LCs). The new provisions will come into effect from November 1, 2007.