Central bank starts buying dollar again
FE Report | Wednesday, 16 July 2008
The central bank has started buying the US currency from commercial banks after a gap of over six months aiming to keep the country's inter-bank foreign exchange market stable, officials said.
The Bangladesh Bank (BB) took the move to keep the rate of the local currency stable against the greenback, which is essential for ensuring the inflow of remittances and export earnings.
The central bank directly bought US$9.50 million from different commercial banks Tuesday at a rate of Tk 68.50 to help keep their 'net open position (NOP)' within the required limit.
In December last, the BB purchased at least $37 million from the commercial banks as part of its intervention, they confirmed.
"We have bought the US dollar from the banks aiming to keep the forex market stable," a BB senior official told the FE, adding that the central bank would continue such intervention in line with the overall market situation.
"The supply of the US dollar has increased slightly in the market mainly due to lower payment of import bills in the recent days," the official observed.
He also said the demand of the greenback may go up by the end of this month.
"Such a move will also help to increase the country's foreign exchange reserve, which stood at $5.81 billion on the day," the official noted.
The officials, however, said higher inflow of remittances from expatriate Bangladeshis and increased export earnings have mainly boosted the supply of the US dollar in the market.
The rate of US dollar remained stable against the local currency on the day due to lower demand for the greenback in the market.
The banks quoted the dollar rates at Tk 68.50-Tk 68.53 on the day, unchanged from the previous level, in the inter-bank foreign exchange market, treasury official of commercial banks said.
"The BB's policy on open market operation is to mop up surplus foreign exchange and this plays a vital role for keeping the forex market stable," a senior treasury official of a private commercial bank told the FE.
He also said the demand for the greenback may increase by the end of this month when settlement of import bills is expected to increase.
On the other hand, the BB started intervention in the market by selling the US currency to directly to authorised dealers from October 29 last year aiming to keep the market stable.
Since then, the central bank sold $735 million to the commercial banks as part of its intervention in the market, they confirmed.
The Bangladesh Bank (BB) took the move to keep the rate of the local currency stable against the greenback, which is essential for ensuring the inflow of remittances and export earnings.
The central bank directly bought US$9.50 million from different commercial banks Tuesday at a rate of Tk 68.50 to help keep their 'net open position (NOP)' within the required limit.
In December last, the BB purchased at least $37 million from the commercial banks as part of its intervention, they confirmed.
"We have bought the US dollar from the banks aiming to keep the forex market stable," a BB senior official told the FE, adding that the central bank would continue such intervention in line with the overall market situation.
"The supply of the US dollar has increased slightly in the market mainly due to lower payment of import bills in the recent days," the official observed.
He also said the demand of the greenback may go up by the end of this month.
"Such a move will also help to increase the country's foreign exchange reserve, which stood at $5.81 billion on the day," the official noted.
The officials, however, said higher inflow of remittances from expatriate Bangladeshis and increased export earnings have mainly boosted the supply of the US dollar in the market.
The rate of US dollar remained stable against the local currency on the day due to lower demand for the greenback in the market.
The banks quoted the dollar rates at Tk 68.50-Tk 68.53 on the day, unchanged from the previous level, in the inter-bank foreign exchange market, treasury official of commercial banks said.
"The BB's policy on open market operation is to mop up surplus foreign exchange and this plays a vital role for keeping the forex market stable," a senior treasury official of a private commercial bank told the FE.
He also said the demand for the greenback may increase by the end of this month when settlement of import bills is expected to increase.
On the other hand, the BB started intervention in the market by selling the US currency to directly to authorised dealers from October 29 last year aiming to keep the market stable.
Since then, the central bank sold $735 million to the commercial banks as part of its intervention in the market, they confirmed.