Written by The Banking Post
Bangladesh Bank sold $122 million to eight banks on Wednesday as rising demand for the US dollar put fresh pressure on the taka in the foreign-exchange market.
The intervention came as higher import-payment obligations, particularly for fuel, gas and power, increased demand for dollars, while comparatively lower remittance inflows around the middle of the month added to the pressure, according to market operators.
The taka weakened to Tk123.9900 per dollar on the interbank market on Wednesday from Tk123.7500 on Sunday. The rate stood at Tk123.9800 on Tuesday, according to Bangladesh Bank data.
Against the upward movement in the exchange rate, the central bank issued an auction notice to sell $100 million to interested banks. It ultimately sold $122 million at Tk124 per dollar.
“We’ve sold the US dollar to the banks through an auction to keep the exchange rate of the greenback against the BDT stable,” said a senior Bangladesh Bank official.
He said further intervention would depend on dollar demand and supply in the market.
“We’ve been monitoring the market closely to ensure exchange-rate stability,” he added.
The latest sale marks another step-up in Bangladesh Bank’s use of reserves to manage short-term pressure in the foreign-exchange market.
The central bank conducted its first auction-based dollar sale on September 14, when it sold $11.50 million to five banks at rates ranging from Tk122.8000 to Tk123.3500 per dollar.
It later sold another $20 million on October 19 at Tk123.6500 per dollar through a similar auction.
A senior treasury official at a private commercial bank said the latest intervention signalled that Bangladesh Bank was prepared to supply dollars from its reserves if upward pressure on the exchange rate persisted.
“Such intervention will help keep the market stable in the near future despite higher import-payment obligations,” he said.
