BB continues forex support to SCB for import bills settlement

Siddique Islam The central bank continues its foreign exchange support through selling US dollar directly as well as providing overdraft (OD) facilities to the commercial banks for settlement of import bills. As part of the operation, the Bangladesh Bank (BB) sold US$30 million at market rate to a state-owned commercial bank (SCB) directly Tuesday to meet the growing demand for the greenback. The US dollar was quoted at Tk 76.62-Tk 76.65 in the inter-bank foreign exchange market on the day against Tk 76.61 of the previous working day, according to the central bank statistics. "We've provided the foreign currency support to the SCB to help them settle outstanding letters of credit (LCs) against imports of fuel oils," a senior BB official told the FE, adding that such operation will continue in line with the market requirement. Last Monday, the central bank sold $13 million likewise to two SCBs and a private commercial bank to settle outstanding LCs against petroleum products, fertilizers and scrap vessels, another BB official said. Besides, the central bank has provided OD facilities for $40 million to the SCB on the same day on the same ground, the central banker said, adding that the amount of outstanding OD facilities stood at $431 million. The country's foreign exchange reserve stood at $9.42 billion Tuesday after the sale of $30 million by the central bank to the SCB, the BB official added. The central bank has so far pumped in $369 million directly to the commercial banks to meet the increasing demand for the greenback in the current fiscal year, the BB data showed. "The demand for greenback picked up recently mainly due to higher import payment pressures only for petroleum products," a senior treasury official of a commercial bank said while explaining the market situation. The import orders for fuel oils increased by nearly 27 per cent to $493.52 million in the month of October last from $389.07 million in the previous month while the LCs against imports worth $499.51 million were settled in October 2011 against $365.88 million in September last "The rising trend in fuel oils import is likely to continue in the coming months to meet the growing demand for oil-based power plants across the country," the treasury official noted. He also said the increased demand for the US dollar may continue in the near future because of higher imports of fuel oils.