Taka loses value against US$ yet again

Bangladeshi Taka has yet again been depreciated against the American greenback owing to the growing import payments, creating a burden on importers, but boosting export and remittance earnings.

The inter-bank exchange rate stood at Tk 91.50 per USD on Monday, up from Tk 89.9 posted in the previous day, according to latest data from the Bangladesh Bank.

This is the ninth depreciation of Taka this year, when the currency depreciated by 6.39 per cent. The local currency depreciated by 20 paisa to Tk 86 per dollar on January 9 for the first time in 2022.

Importers however are still spending over Tk 95 per USD as import payments. Meanwhile, banks are paying Tk 94 to Tk 95 to mobilise USD from exporters and remitters, industry insiders say.

Before the move, on June 2, the Taka lost its value by 90 paisa to Tk 89.9 against per USD when the central bank allowed a floating exchange rate, backtracking on its earlier directive on the uniform exchange rate.

On Monday, some banks faced USD shortages while paying import bills. Those banks then requested the Bangladesh Bank to sell $130 million to them, a senior official of the central bank told The Business Post.

He added that the banking regulator sold $130 million to banks on that day, and it sold over $6 billion to banks during August to June 6 period of this FY.

The Forex reserves of Bangladesh dropped to $41.9 billion on Monday from $42.1 billion on June 1 due to the dollar selling spree of the central bank, insiders say.

On May 29, the Bangladesh Bank had fixed the inter-bank exchange rate at Tk89 per USD in contrast to the existing Tk 87.90, and the LC for import or Bills for Collection (BC rate) was fixed at Tk 89.15 per USD in contrast to the existing Tk 88.

However, most of the banks did not follow the uniform exchange rate. Then on June 2, the central bank allowed a floating exchange rate for Banks. A number of economists and bankers welcomed the regulator’s latest decision on the exchange rate of USD.

Due to the impacts of the Covid-19 and the Russia-Ukraine war, costs of product supply and delivery have gone up. As a result, the currency of Bangladesh began losing its value like many other currencies in the world, due to the rising demand for US dollars.

Rising import payments played a key role in the increase of the American greenback’s demand.

During July to April, Bangladesh’s trade deficit – the gap between the country’s export incomes and import expenditures – widened by 53 per cent, higher compared to the same period last FY, shows data from the Bangladesh Bank.