The price of the US dollar shrank in the local market on Saturday although the greenback has global surge to its highest level in two decades on Thursday.
The dollar index, a gauge of the US currency's strength against a basket of other developed world currencies including the euro, the yen, and the pound, climbed as much as 0.9 per cent to just under 104, its strongest level since 2002.
The value of the greenback in the local market, which crossed Tk92.60 mark even a few days back, now dropped to Tk92.
Market insiders, however, attributed such a fall in the value of a dollar to its increased supply in recent times as the increased number of expatriates are coming home than in previous years. Many expatriates could not come home following the outbreak of the coronavirus pandemic in 2020.
Local vendors mainly collect dollars and other currencies from expatriate Bangladeshis.
A vendor at Purana Paltna told the FE on Saturday that they offered much reduction in values if anyone buys the dollar in a bigger amount.
But the central bank's interbank dollar exchange rate was suspended on Saturday. But the rate that exists since Thursday is Tk86.45.
Banks come to buy currencies from the kerb market at a time when they have less than the amount of forex needed to meet such payments.
"To my mind, the supply is more adequate than the demand," said Money Changers' Association of Bangladesh president Mr AKM Ismail Haq.
He said the expatriates who could not come for two years are coming in a large number to celebrate the Eid and they are the main contributors to the market.
He also said hundreds of thousands of people have left Dhaka to celebrate the Eid leaving the demand side weaker.
He added the central bank has sold out the greenback to the banks boosting its supply.
In the meantime, the inter-bank call money rate remained almost stable on Saturday, the last working day before the Eid-ul-Fitr, due to lower withdrawal of cash from the banks.
The call rate ranged between 4.75 per cent and 5.25 per cent on the day unchanged from the previous level, according to market operators.
However, most of the deals were settled at rates varying between 4.75 per cent and 5.00 per cent, they added.
Meanwhile, the weighted average rate (WAR) on call money came down to 4.86 per cent on Thursday from 4.97 per cent of the previous working day.
The total volume of transactions in the market rose to Tk8.99 billion on the day from Tk4.21 billion of the previous working day, according to the central bank's latest statistics.
jasimharoon@yahoo.com