To boost the country’s forex reserves, the Bangladesh Bank has purchased $588 million from 12 banks under the 30-day currency swap deal after it issued a circular in this regard on February 15. Most of them are private banks.
On condition of anonymity, a senior central bank official confirmed it to The Business Post on Tuesday.
However, the country’s forex reserves increased because of the swap. The country’s forex reserves had stood at $20.19 billion on February 20 this year. Again, it stood at $20.50 billion on February 25.
Moreover, the Bangladesh Bank introduced currency swaps with banks for the first time on February 16 by issuing a circular that meets the net reserve condition set by the International Monetary Fund (IMF) with its $4.7 billion loan programme.
Usually, the central bank has to buy the greenback if it needs to raise the reserves to meet the condition. Now it may get foreign currencies from banks for a certain period in exchange for only interest.
Insiders think that the central bank is doing swaps to meet the conditions set by the IMF. On the other hand, state-owned banks and several private banks are facing the liquidity crisis as well.
Ahsan H Mansur, Executive Director of Policy Research Institute of Bangladesh (PRI) said, “The Bangladesh Bank benefits from a currency swap deal because it can purchase the USD from the banks. As a result, forex reserves are increasing which helps meet the IMF condition.”
“I don’t want to say that this currency deal is not positive for the economy. The central bank needs right now to boost the forex reserves. Banks are unable to recover non-performing loans from influential people,” he added.
Bangladesh Bank in a press release said under this deal, the banks will get instant money against surplus dollars. Again by returning the money after the specified time, the commercial banks will get an equivalent amount of dollars from Bangladesh Bank. Both the BB and commercial banks will benefit from this system, according to the central bank notification.
The central bank said that a minimum of $50 million or its equivalent can be exchanged under this system. To take advantage of currency exchange, the central bank will have an agreement with the interested banks.
According to sources concerned, currently commercial banks exchange dollars and money with each other for their own needs.
