The exchange rate of Bangladesh taka (BDT) further drops against US dollar mainly due to higher demand for the greenback for settling import-payment obligations.
Taka lost its value by 25 paisa in the inter-bank foreign exchange (forex) market on Tuesday in such a fall after more than a month, according to market operators.
The greenback was quoted at Tk 86.45 each on the day against Tk 86.20 on the previous working day. It was Tk 86.00 on March 21 this year.
The exchange rate of BDT also depreciated similarly against dollar at customers' level for settling import payments.
Dollar's exchange rate was quoted a maximum of Tk 86.50 each for the sale of bills for collection, generally known as BC, on the day against Tk 86.25 of the previous level.
On the other hand, banks quoted dollar at Tk 85.50 on the day against Tk 85.25 on the previous working day to remitters for telegraphic transfer (TT) clean of their funds.
However, the exchange rate of BDT against dollar remained unchanged in the inter-bank forex market and at customers' level on Wednesday from Tuesday's level. But some banks traded dollar at more than Tk 92 in the name of 'corporate deal' to settle import-payment obligations of their customers, said the operators.
"The local currency depreciated against US dollar on Tuesday in line with the market requirement," a senior official of the Bangladesh Bank (BB) told the FE on Wednesday.
He said the demand for dollar has recently increased due to higher prices of essential items, including fuel oils, in the global market following the ongoing Russia-Ukraine war.
"We're providing the foreign-currency liquidity support to banks continuously on a priority basis to settle their import-payment obligations," the central banker said while replying to a query.
As part of the move, the BB has so far sold over $4.70 billion from its reserves directly to commercial banks as liquidity support for import payments in the current fiscal year (FY), 2021-22.
BDT'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, the operators explained.
Meanwhile, the settlement of letters of credit (LCs), generally known as actual import, in terms of value, rose by nearly 50 per cent to $60.57 billion during the July-March period of FY22, from $40.48 billion in the same period of the previous fiscal, according to the BB's latest statistics.
On the other hand, the opening of LCs, generally known as import orders, grew by more than 46 per cent to $68.36 billion during the period from $46.81 billion in the same period of FY21.
Actually, Bangladesh's overall imports have increased significantly in recent months, following gradual reopening of economic activity - both at domestic and global levels - after more than one year of Covid-19 pandemic shock.
According to the operators, lower remittance inflow has also pushed up pressure on the country's foreign-exchange market recently.
Inward remittance has dropped by nearly 18 per cent to $15.30 billion in the first nine months of FY22 from $18.60 billion in the same period of FY21.
"The BDT will remain under pressure against the US dollar for some time," 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 market.
The latest depreciation of the local currency will help boost export earnings as well as the flow of inward remittance, according to a treasury head of a leading private commercial bank.
"But import costs are increasing gradually following such depreciation of BDT against the greenback," the private banker explained.
Inflationary pressure may rise further on the economy in the coming months, if such depreciating mode of the local currency against US dollar continues, he added.
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