Written by The Banking Post
Bangladesh Bank’s continued intervention in the foreign exchange market is simultaneously shoring up the country’s reserves and easing liquidity pressure on commercial banks.
On Sunday, the central bank purchased $83 million from 11 commercial banks at rates between Tk 121.47 and Tk 121.50 per dollar, injecting roughly Tk 10 billion into the banking system. Since July 13, the BB has bought a total of $622 million under the prevailing free-floating exchange rate regime, paying more than Tk 75.57 billion to banks struggling with slow deposit growth and subdued lending.
Officials said the interventions are aimed at keeping the taka within the undisclosed band of the crawling-peg system while bolstering reserves in line with IMF requirements under its $5.5 billion loan package. The dollar buys come amid strong remittance and export earnings, while import demand remains muted, leaving excess foreign currency in the banking sector.
As of August 10, gross foreign exchange reserves stood at $30.25 billion under BB’s calculation and $25.23 billion as per IMF’s BPM6 method, up from $29.80 billion and $24.78 billion, respectively, at the end of July.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank PLC, said liquidity from dollar sales has also reduced government borrowing costs, reflected in lower yields on treasury bills. On Sunday, cut-off yields fell to 10.19% for 91-day bills, 10.39% for 182-day bills, and 10.49% for 364-day bills, compared to 10.45%, 10.81%, and 10.57% on July 20.
