Don’t panic over dollar rate rise: BB governor

There is no reason to panic about the US dollar exchange rate hike in the kerb market, said Bangladesh Bank Governor Fazle Kabir on Wednesday.

“The exchange rate has crossed Tk 100 per dollar in the open market, but only a few people buy from there. So, do not panic,” he told the closing ceremony of the Non-Bank Financial Institutions Fair 2022, the first of its kind in Bangladesh, in the capital.

He accused the media of creating panic in the market.

“The dollar exchange rate has increased due to growing import payments as we are an import-dependent country,” said Kabir, who was the chief guest of the event.

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

Mentioning the difference in the central bank and market rates of dollar, the Bangladesh Bank chief said the interbank exchange rate was fixed at Tk 87.5 per dollar but the market rate was higher.

The central bank was providing assistance from its reserves to settle import payments of Bangladesh Petroleum Corporation, power plants, and essential food items, he said.

He further said the central bank had injected around $6 billion into the market to meet the growing demand.

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. Reserves were $46 billion on February 28 this year. The Bangladesh Bank governor said forex reserves rose to $42.35 billion on Wednesday.

“From July last year till now, we devalued taka by 3.2 per cent against dollar. However, all countries, except for one or two, depreciated their local currencies by a higher proportion,” he noted. The dollar exchange rate in the kerb market crossed Tk 100 for the first time on Tuesday, intensifying the current volatility in the foreign exchange market. Money changers in the capital sold each dollar for Tk 102, up from Tk 98 a day ago.

The central bank devalued taka by 80 paisa against dollar on Monday, the highest depreciation of the local currency in a single day. The interbank exchange rate then stood at Tk 87.5 per dollar, up from Tk 86.7 a day before.

As a result, the difference between the interbank and open market rates reached over Tk 14, the highest in Bangladesh’s history.

Meanwhile, importers are spending as much as Tk 94-96 per dollar to pay import bills. In the last 20 days, the value of taka fell by Tk 1.3 against each dollar in three phases. The Bangladesh Bank depreciated taka five times this year. Bangla financial daily Bonik Barta as well as Bangladesh Leasing and Finance Companies Association jointly organised Wednesday’s fair where 15 non-bank financial institutions participated.