Monday, 4 July, 2022

Dollar gets stronger against taka amid rising imports

Bangladesh taka continues to lose value against US dollar amid increasing pressure on import expenses as the central bank tried to cap the uptrend of import and inflation in market.

Bangladesh Bank, the central monetary authority of the country, devalued 80 paisa of local currency against per unit of US dollar in inter-bank transaction on Monday.

“We tried to stabilise money market through depreciate local currency to discourage importers,” Habibur Rahman, chief economist of Bangladesh Bank, told the Daily Sun.

The monetary analyst said the central bank withdrew taka from market through selling dollar to control inflation that was also on upward trend.

The devaluation of Bangladesh currency will benefit the expatriate remittance earners and exporters while the import-oriented business will go through tough times.

The Bangladesh Bank increased the dollar price by 20 paisa in January this year which was getting stronger as the central bank depreciated the local currency by 20 more paisa in March.

In the second week of May, the inter-bank exchange rate of dollar was set at Tk 86.7 per unit while the price crossed Tk 90 in an open market and retail stage.

Many businessmen were bound to buy dollar from open market with higher price that costs up to Tk 96 to get the foreign currency for opening letter of credit.

Bangladesh Bank continued selling dollar to the banks to mitigate the pressure of increasing imports and huge gap in balance of payments.

The remittance and export earnings are two major source of US dollar. The central bank began spending from the reserves as collective earnings from remittance and export could not meet increasing volume of imports.

The selling of dollars from reserves also created cash crunch in the markets as the central bank withdrew local currency for dollar market.

The foreign reserves stood at $ 41.95 billion that can meet the import expenses for next five months.

The businesses logged LC worth of $64.5 billion during the first nine months (July-March) of the fiscal year 2021-22, which is 43.84 percent higher than the corresponding period of the previous fiscal, shows the central bank data.

Remittance earnings dropped by 16.25 percent year-on-year as the expatriates sent $ 17.31 billion in last 10 months while the export earnings stood at $ 43.34 billion during the same period.