The exchange rate of Bangladesh Taka (BDT) fell significantly against the US dollar on Tuesday due to higher demand for the greenback for settling import-payment obligations.
On the inter-bank foreign-exchange (forex) market on the day, the BDT lost its value by 20 poisha - the steepest single-day fall in more than a couple of months, according to the market operators.
The dollar was quoted at Tk 86.20 each on the day against Tk 86.00 on the previous working day. It was Tk 85.80 on January 06 this year.
The exchange rate of the local currency also depreciated similarly against the US currency at the customers' level for settling the import payments.
The exchange rate of the dollar was quoted a maximum of Tk 86.25 each for the sale of bills for collection, generally known as BC, on the day against Tk 86.05 of the previous level.
On the other hand, the banks quoted dollars at around Tk 85.25 on the day against Tk 85.05 on the previous working day to the remitters for telegraphic transfer (TT) clean of their funds, they added.
Talking to the FE, a senior official of the Bangladesh Bank (BB) said the local currency depreciated against the US dollar in line with the market requirement.
"The demand for the US dollar has increased recently due to higher price of essential items, including fuel oils, in the global market following the Russia-Ukraine war," he explained.
He also said that the central bank is providing its foreign-currency liquidity support to the banks on priority basis to settle their import-payment obligations.
As part of the move, the central bank has so far sold more than $3.73 billion from the reserve directly to the commercial banks as liquidity support for settling their import payment obligations in the current fiscal year (FY 2021-22).
The local currency's latest depreciation came against the backdrop of higher outflow of foreign exchange due to the 'hefty growth' in import- payment obligations than that of the inflow in the last few months, according to the market operators.
Bangladesh's overall imports jumped by 52.50 per cent to $45.48 billion during the July-January period of FY'22 from $29.82 billion in the same period of the previous fiscal year, the BB data showed.
The high prices of essential commodities, including petroleum products, in the global market have pushed up the country's overall import payments during the period under review, they added.
They also said lower inflow of remittances also pushed up pressure on the country's foreign-exchange market recently.
Inward remittances dropped by nearly 20 per cent to $11.94 billion in the first seven months of FY'22 from $14.91 billion in the same period of FY'21.
"The BDT will remain under pressure until the current-account deficit reduces significantly," Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank Limited, told the FE while explaining the latest situation of the country's forex.
Meanwhile, Bangladesh's current-account deficit exceeded the $10-billion mark during the period under review following the higher import payments alongside lower inflow of remittances.
The current-account deficit rose to $10.06 billion during the July-January period of FY'22 from $8.18 billion a month ago. It was a $1.56 billion surplus in the same period of FY'21.
Experts, however, predict that the widening current-account deficit may continue in the coming months if the lower inflow of remittances and higher import expenses persist.
Talking to the FE, a treasury head of a leading private commercial bank said the latest depreciation of the local currency would help boost export earnings as well as the flow of inward remittances.
"But the import cost will also go up slightly, which may fuel inflationary pressure on the economy," the private banker explained.
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