Foreign exchange market to stabilise by February

Bangladesh Bank (BB) has assured that the country’s foreign exchange market will stabilise within January-February of next year as the demand-supply gap will be filled soon.

The central bank also has not instructed banks to suspend opening of letters of credit (LCs), BB Executive Director and spokesperson Abul Kalam Azad told a media briefing at the BB headquarters on Monday.

He said banks are now opening LCs based on their foreign currency fund and the lenders will also start opening LCs soon.

In a written speech, Azad said that media reports on the suspension of the opening of LCs are not true. Some $1,263 million worth of LCs were opened on the first 10 days of November and the figure was $4,743 million in October, he added.

The global economy is now facing volatility due to the Covid-19 pandemic and the Russia-Ukraine war and this has created a supply shortage in the forex market, he said.

The BB spokesman said that the central bank provides dollar support for payment of government LCs opened for imports of priority sectors and essential commodities to maintain economic stability by keeping the country’s energy and food security intact.

Remittance earnings also saw a 2.8 per cent year-on-year growth as expatriate Bangladeshis sent $659 million as of November 10, compared to $641 million during the same period last year, he said.

Meanwhile, Azad said, their special inspection of the forex market has found information about over-invoicing and under-invoicing. “We have detected 20-200 per cent over-invoicing in recent times.”

No liquidity shortfall

Addressing the media on Monday, the central bank spokesperson also ensured that there is no liquidity shortfall in the country’s banking sector yet and the banking system is continuing to remain financially strong.

Currently, the excess liquidity in the banking sector stands at Tk 1,69,586 crore, he said.

He said BB has already alerted the managing directors of commercial banks and if any bank faces a liquidity shortfall, the banking regulator will take initiatives to address that.

Regarding various conspiracies on social media and news reports about people withdrawing deposits, Azad said the public deposits are secured in banks. “No bank was shut down in the last 51 years of the history of Bangladesh. Hopefully, no bank will shut down in the coming days.”

According to BB data, the total deposit amount in the banking sector was Tk 14,82,829 crore as of September this year.