Home ›› 23 Aug 2021 ›› Front
The US dollar exchange rate to local currency went up to Tk85 on Sunday, the highest in eight years, thanks to rising import payments viewed as a sign of economic recovery from the Covid-19 pandemic.
The interbank exchange rate stood at Tk 85.1 per dollar, up from Tk 84.95 four days earlier and Tk 84.8 a year ago, Bangladesh Bank data show.
Bankers said the demand for foreign currency would increase in the coming days as the wheel of the economy is turning again, shrugging off the sluggishness created by the pandemic.
“One of the reasons behind the rising US dollar exchange rate trend is the increasing import payment as the country’s business and the economy started to revive from the pandemic fallout,” said Agrani Bank Managing Director and CEO Mohammad Shams-Ul Islam.
Import payment will increase in the coming days when the economy and business fully revive, he added.
In the July-June period of last fiscal year, import payment rose by 19.71 per cent to $60.68 billion, BB data show.
Shams-Ul Islam said that the slowdown of remittance is another reason for the increasing demand for the US dollar.
Remittance inflow fell by nearly 28 per cent to $1.87 billion in July, the first month of FY2021-22, from $2.6 billion in the same month of the previous fiscal.
Throughout 2020, the country’s banking sector saw a steady inflow of forex thanks to record remittance inflow and a lower import trend. Then, the central bank purchased $7.68 billion from the banking sector in the first 11 months of the last FY, the highest on record.
But on August 19 this year, BB sold $50 million to banks due to growing demand in the market.
The country’s economy is returning to normalcy which raises import payment, said Bangladesh Bank Executive Director and spokesperson Md Serajul Islam. “That is why the demand for dollars has been created,” he added.
On August 19, the foreign exchange reserve stood at $46.58 billion.
However, Zahid Hussain, former lead economist of the World Bank, Dhaka, said the increasing trend of forex reserve would not sustain in the upcoming days as import spending will increase.
“So the central bank should be cautious on any lending from the reserve to implement large infrastructure projects,” he said.
Zahid said that import growth rose because of growing spending on imports but the volume did not increase. “It is not a sign of economic recovery,” he said.
The interbank exchange rate of US dollar was Tk 84.8 in August 2020; Tk 84.5 in 2019; Tk 83.75 in 2018; Tk 80.7 in 2017; Tk 78.4 in 2016, BB data show.
