BB starts buying dollars again as unrest destabilises forex market

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Bangladesh Bank has started to purchase US dollars again from the scheduled banks due to a drop in demand for the greenback in the business sector amid the existing political unrest, said officials of Bangladesh Bank.
The central bank has already purchased US dollars worth $153 million from the local banks in the first 22 days of this month to keep stable the exchange rate of the taka against the greenback, but its effort has virtually failed to stabilise the market.
After a gap of two and a half years, the BB sold greenbacks worth $357 million to the banks between November and December of 2014 as demand for the foreign currency went up for a pick-up in imports in the period.
The US dollar has also started to depreciate again against the Bangladeshi currency taka since the second week of January as the scheduled banks are now enjoying surplus dollars due to lower import financing, a BB official told New Age on Thursday.
The BB data showed that the dollar depreciated continuously since the second week of this month as it was quoted (buy-sales) at Tk 77.95-Tk 77.95 on January 11, at Tk 77.81-Tk 77.83 on January 19, at Tk 77.81-Tk 77.81 on January 20 and Tk 77.80-Tk 77.80 on January 21.
The BB data showed that the dollar deprecated in every working day between January 11 and January 21 of this year.
The BB official said that the businesspeople had taken initiative to expand their business in the second half of the financial year 2013-14 after a major setback to their business due to the political unrest during the first half of the FY14.
For this reason, the dollar price had increased to Tk 77.95 on December 30, 2014 from Tk 77.40 on October 26, 2014.
But, the central bank has failed to keep vibrant the foreign exchange market due to the existing political unrest which forced it to purchase dollars again, the BB official said.
The businesspeople are going to adopt again a ‘wait and see’ approach to expansion of their business due to the fresh spate of political violence and unrest which started from the first week of this month, he said.
The go-slow policy taken by the businesspeople amid the political unrest has ultimately hit the exchange rate between taka and dollar, he said.
The central bank purchased dollars worth $10 million on January 22, $50 million on January 20, $50 million on January 18, $13 million on January 14 and $30 million on January 12 of 2015.
The BB purchased dollars worth $1.58 billion between July 1 and January 22 of the FY15, the BB data showed.
The central bank had bought dollars worth $5.15 billion in FY14 and $4.53 billion in the FY13.
The BB will have to purchase dollar more in the coming days if the banks continue to maintain the existing lower import financing, the official said.
The BB data showed that the settlement of letters of credit, or actual import, decreased by 0.72 per cent to $2.66 billion in the first 27 days of December in 2014 from $2.68 million during the same period a year ago.
The opening of LCs, or actual import orders, also decreased by 0.57 per cent to $2.92 billion in the first 27 days of December in 2014 from $2.94 billion in the corresponding period of 2013.
The country’s import payments increased significantly in the recent months, but it entered in to a negative zone from December and the negative trend might continue in the coming months due to the political unrest, the central banker said.
Source: New Age

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