Bangladesh Bank’s expansionary policy measures and its recent drives of buying foreign currency from the market helped maintain a stable and competitive value of Taka against US dollar over the last one year.
BB was able to maintain a stable interbank exchange rate of Taka that greatly helped grow confidence among the exporters, experts have said.A strong Taka not only makes the imports cheaper, exporters also benefit from cheap imports of raw materials they need.
During the first half of FY20, Taka’s value against US dollar faced a little depreciating pressure, which disappeared gradually during the second half mainly due to shrinking imports and a steady remittance inflow,” said a BB official.
The official said despite the adverse impact of the Covid-19 pandemic on the economy, BB was able to keep the currency exchange rate stable.
On 17 February 2021, the average Taka-US dollar exchange rate stood at Tk 84.8, which was Tk 84.95 on 17 February 2020.
In June 2020, the exchange rate went slightly upward to Tk 84.85 and dropped to Tk 84.80 in January this year.
In FY20, remittance inflow hit a new record of $18.20 billion, while imports declined by 10.81per cent to $46.24 billion from $51.84 billion in FY19. However, Taka’s value against the US dollar depreciated by 0.5 per cent in FY20, which was markedly smaller than India and China but pretty much in line with other Asian competitors like Vietnam, Indonesia and Cambodia.BB spokesperson Md. Serajul Islam told this correspondent on Tuesday that the stable value of Taka has also encouraged Bangladeshi expatriates to send more remittance to the country.
He also noted that the stable exchange rate will continue in the reaming period of the current fiscal year.
The BB purchased greenback worth a record $5.49 billion in the first half of the current fiscal year to keep the exchange rate of the local currency stable.
The previous highest was recorded in 2013-14 when Bangladesh Bank bought $5.15 billion from local banks.
Although the dollar purchase is helping the export sector and swelling the foreign exchange reserve, the buying spree has flooded the financial sector with excess liquidity.
The interbank exchange rate was hovering around Tk 84.80 per US dollar since July 2019. The rate was Tk 84.95 on March 2020, a day before the country declared a countrywide lockdown to contain the virus.
The exchange rate of local currency taka is more stable than in India. For example, the Indian rupee was at 73.12 per dollar on January 11 this year, up from 71.37 on January 1 last year.
"The country would have managed some benefits at this moment if it had depreciated the local currency before the pandemic," said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue.
Peer countries have devalued currencies significantly in the recent period, he noted.