Per USD now BDT 87.5

The Bangladesh Bank on Monday further devalued the local currency against the US dollar as the soaring import payments have created an acute shortage of the greenback in the banking sector.

The central bank devalued the taka by 80 paisa against the US dollar, the highest depreciation of the local currency in a single day.

After the devaluation, the inter-bank exchange rate stood at Tk 87.50 per USD, up from Tk 86.70 the previous working day.

The US dollar was quoted on the day at a maximum of Tk 87.60 per bill for collection, or BC, compared Tk 86.75 at the previous level.

Importers, on the other hand, are spending as much as Tk 94 to Tk 96 per dollar to pay import bills.

Money exchangers also said that the kerb market rate for the dollar was greater than the official rate.

In last 20 days, the value of taka fell by Tk 1.30 against the dollar in three phases.

The Bangladesh Bank has so far depreciated the taka five times this year.

“The central bank has devalued the taka again to stabilize the market because demand for the US greenback has increased in the market,” said Bangladesh Bank Executive Director and Spokesperson Serajul Islam.

The demand for USD is growing mainly due to the high import payment in recent times.

Import payments stood at $61 billion between July and March of this fiscal year while export earnings were $36 billion, resulting in a trade deficit of $25 billion, the central bank data shows.

To meet the growing demand, the central bank has been continuously injecting the US dollar into the market since August.

The BB injected over $5 billion into the banking sector as of Monday.

Contacted, former governor of the Bangladesh Bank Salehuddin Ahmed said the volatility had not only affected Bangladesh but also the whole world owing to the Russia-Ukraine war and the reopening of the global economy after the Covid-19 pandemic.

He said the central bank had taken measures to tackle the situation but it was already too late, adding that the regulator should have depreciated the local currency earlier like in other countries.

The economist said the banking regulator only estimates different indicators of the forex market in the monetary policy but it should also review the market and then depreciate the taka further if needed.

The import value was higher than the volume, which was a problem, he said, adding the central bank and the revenue board should increase surveillance to tackle money laundering in the name of imports.

Forex reserve’s present situation

The country’s foreign exchange reserves are declining day by day due to growing import payments and a downward trend in remittance earnings.

Remittance was down by 16.25 per cent to $17.3billion in ten months of the current fiscal year, said BB data.

Forex reserves fell to $41.92 billion on May 11 after paying the Asian Clearing Union $2.24 billion, as per the central bank data.

The forex reserve was $46 billion on February 28 this year.