Depreciating trend of the local currency against the US dollar is continuing despite the central bank's foreign currency support to the commercial banks.
The exchange rate of Bangladesh Taka (BDT) depreciated by five paisa against the greenback in the last two days mainly due to higher demand for the US currency in the market.
The US dollar was quoted at Tk 82.85 each on Wednesday against Tk 82.83 of the previous working day. It was Tk 82.80 on Monday, according to the market operators.
On the other hand, the Bangladesh Bank (BB) has strengthened its foreign currency support to the banks for settling import payment obligations, particularly of food grains, fuel oils and capital machinery.
As part of the move, BB sold US$24 million directly to seven commercial banks on Wednesday to meet the growing demand for the greenback in the market. On Tuesday, the central bank similarly sold $25 million to five banks on the same ground.
"We're selling the US currency to the banks at market rate for making their import payment bills," a BB senior official told the FE.
He also said the central bank may continue providing such foreign currency support to the banks in line with the market requirement.
BB has resumed giving the support in the recent months through selling the US currency to the banks directly to keep the market stable.
A total of $1.20 billion was sold to the commercial banks since July 01 of this fiscal year, 2017-18, as part of its ongoing support, according to BB's latest data.
The demand for the US dollar is gradually increasing, mainly due to higher import payments pressure, particularly of capital machinery, petroleum products, consumer items and food grains.
Talking to the FE, another BB official said the demand for the greenback may decrease by the end of this month, as the flow of inward remittance is increasing significantly. Bangladesh received $646.51 million as remittance between January 1 and January 12 from its nationals working abroad, according to the central bank's statistics.
The BB official expects that the inflow of remittance may reach nearly $1.40 billion by the end of this month, if the ongoing trend of inward remittance continues.
The amount of remittance from Bangladeshi nationals working abroad was $1.17 billion in December 2017, down by $47.57 million than that of the previous month. In November, the amount was $1.21 billion.
"Such depreciating trend of the local currency against the US dollar has encouraged the expatriate Bangladeshis to send their hard-earned money to homeland that is also keeping the foreign exchange reserve over $32 billion," the central banker noted.
The country's forex reserve rose to $32.32 billion on Wednesday from $32.27 billion of the previous level despite selling the US dollar to the banks.
"Higher inflow of remittance along with overseas development assistance has contributed to boost the forex reserve," the BB official explained.
