Taka depreciates 3pc this year

Siddique Islam The local currency, taka, has so far depreciated by over 13 per cent against the US dollar this calendar year mainly due to higher demand for the latter for settling the import bills, particularly that of fuel oil. "The US dollar has gained against the Bangladesh Taka (BDT) continually from September last because of its short supply in the market," a senior treasury official of a foreign commercial bank told the FE Saturday. The US dollar was quoted at Tk 80.45 -Tk 80.60 in the Continued to page 7 col. 6Continued from page 1 col. 8 inter-bank foreign exchange (forex) market on December 15 last against Tk 70.79-Tk 70.92 on January 2 this year. Talking to the FE, a senior official of the Bangladesh Bank (BB) said the value of the local currency vis-à-vis the greenback is dependent on the demand for settling import payments and the availability of the latter from exports and inward remittances. "It is apparent that these factors are subject to seasonal fluctuations which causes temporary instability in the forex market from time to time," the BB official said, adding the national economy would come under pressure further if the recent exchange rate fluctuation continues. Treasury officials said that supply of US dollar has declined due to the widening of the country's overall external trade deficit and slow growth of inward remittances. The country's overall trade deficit widened by over 70 per cent to US$ 3.103 billion in the first four months of the current fiscal (FY) following higher import of fuel oils, officials said. The overall trade deficit rose to $3.103 billion in July-October period of the FY 12 from $1.825 billion during the corresponding period in the previous fiscal, according to the central bank statistics. The country received $4.93 billion as remittances during July-November period of the current fiscal year, registering a 7.56 per cent growth over the corresponding period of the previous fiscal, the BB data showed. "Lower inflow of foreign assistance has also contributed to the short supply of the greenback in the foreign exchange (forex) market," the treasury official said. To make the situation worse, the inflow of foreign assistance came down to $330 million during the period under review from $443 million in the same period of FY11. "The market forces have fixed the exchange rate of US dollar against the BDT considering the demand for, and supply of, US dollar," another BB official told the FE. He also said the central bank is monitoring the overall foreign exchange market taking into consideration the local, regional and the global forex market situations. "The BDT has depreciated less against the US dollar than the Indian Rupee," he said, adding that the Indian Rupee has depreciated against the greenback by around 21 per cent. The average exchange rate of US dollar rose to Tk 80.6102 for bills for collection (BC) on December 15 last year from Tk 71.3244 on January 2 this year, according to the statistics of Bangladesh Foreign Exchange Dealers Association (BAFEDA). "Such depreciation of the local currency against the US dollar may fuel inflationary pressures on the economy," the treasury official noted. He termed the depreciation of the BDT against the US dollar after introducing floating exchange rate (FER) in 2003 as unprecedented. "The country's exporters and wage earners, who are working abroad, are, however, benefited from such depreciation," he added.