Written by The Banking Post
Bangladesh Bank has sold another $100 million from its foreign exchange reserves to increase dollar supply in the market and help stabilise the exchange rate.
The central bank sold the dollars to commercial banks through an auction on Wednesday (November 4). It had sold $122 million through a similar auction last week.
The move comes amid growing demand for dollars as import costs, particularly for fuel and other commodities, continue to rise, according to people familiar with the matter.
In Wednesday’s auction, each bank was required to submit a single bid for a minimum of $500,000.
The central bank had also invited bids to sell $100 million on Tuesday. Although several banks participated, the auction was cancelled at the last moment without any explanation to the participating banks.
Bangladesh Bank had sold large amounts of dollars from its reserves for several years before the fall of the Awami League government in August 2024. As a result, reserves, which had crossed $48 billion in August 2021, gradually declined to $25.92 billion.
After taking office as governor, Dr Ahsan H Mansur announced that the central bank would stop selling dollars from its reserves. The same policy continued under the current governor, helping reserves recover.
Foreign exchange reserves crossed the $37 billion mark on June 29 and rose to $37.41 billion on September 1. However, they have declined since then, falling to $36.43 billion on Tuesday.
A Bangladesh Bank official said developments surrounding the US midterm elections and a possible change in the political leadership in Israel had raised hopes of an improvement in the global geopolitical situation. International oil and dollar prices declined on Wednesday amid these developments, the official said, expressing hope that conditions would also improve in Bangladesh.
Meanwhile, the interbank foreign exchange market has seen the dollar appreciate in recent weeks after remaining stable for an extended period.
The exchange rate crossed Tk124 this week, with the dollar trading at Tk124.35 in the interbank market over the past two days. It had traded at Tk124.30 during the preceding two days.
At the beginning of October, the interbank dollar rate stood at Tk123. It gradually increased to Tk123.99 on the last working day of the month.
For nearly one and a half years after the fall of the Awami League government, the interbank exchange rate remained within a range of Tk121 to Tk122.30. Since March this year, however, the dollar has continued to strengthen, reaching Tk124.35.
