BB keeps buying greenbacks

BB

The Bangladesh Bank purchased dollars worth $407 million in March from the money market to tackle depreciation of the greenback against the local currency.
According to the latest BB data, the central bank has purchased dollars worth $36.01 billion from the commercial banks between July 1 and April 3 of the financial year 2012-13.
The central bank’s record book showed that the BB bought the highest amount of dollars in the first nine months and three day of the FY 2012-13 since the FY 2004-2005.
BB officials said that the purchase of the dollar by the central bank would not put positive impact on the macro-economic situation of the country as the greenbacks were not being invested in the productive sector.
The country’s commercial banks are now enjoying a significant flow of dollars as the expatriate Bangladeshis are sending record amount of inward remittance in almost every month of this financial year.
Besides, the import payment massively declined since the beginning of the FY 2012-13 with a negative import growth in capital machinery and industrial raw materials, he said.
Under the circumstances, the BB is buying dollars to check appreciation of the taka against the dollar, he said.
Besides, the BB is supplying treasury bills and treasury bonds instead of cash against the purchases of dollar with a view to tackle inflation, the official said.
But, the inflation may increase as the T-bills will be matured soon and cash will enter into the money market in the form of local currency taka.
The BB data showed that the central bank purchased dollars worth $26 million on April 1, $75 million on March 28, $70 million on March 24, $35 million on March 19 and $13 million on March 13.
The BB bought dollars worth $500 million in February, $615 million in January and $338 million in December of this financial year.
The BB purchased dollars worth $157 million in the FY 2011-12, $316.50 million in the FY 2010-11, $2,161 million in the FY 2009-10 and $1,484.20 million in the FY 2008-09.
Another BB official said that the central bank had taken the initiative of purchasing dollars to maintain stability between the dollar and the taka so that the expatriate Bangladeshis became encouraged to remit more greenbacks to their relatives.
The BB data, however, showed that the greenback continued to deprecate against the taka frequently.
The dollar was quoted at Tk 78.10 in the inter-bank forex market on Wednesday against Tk 78.15 on Sunday and it was quoted at Tk 79.75 to Tk 79.80 on January 1, 2013.
It is not possible to check the depreciation of the dollar against the taka if the declining trend in import payment persists in the coming months, the BB official said.
He feared that the import payment of industrial raw materials and capital machinery would decrease further as the current political violence had already created an unfavourable business environment.
Businessmen are feeling insecurity in expanding their enterprises due to the political turmoil, he said.
Under the circumstance, the depreciation of the dollar against the taka may continue and the central bank will have to maintain the purchasing of greenbacks from the market.
The country’s foreign exchange reserve has recently crossed $14-billion mark for the first time.

Source: New Age

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