BB buys $83m more from banks in dollar auction

The central bank today purchased $83 million more from banks through a dollar auction as part of its ongoing strategy to curb the depreciation of the US dollar against the taka and revitalise the remittance and export sectors.

According to central bank data, it bought dollars today at the rate of Tk121.47-121.50. 

The Bangladesh Bank has so far bought $622 million in five auctions in less than one month.

This series of interventions began on 13 July, when the central bank bought $171 million at Tk121.50 in a historic first-ever dollar auction. This was followed by another purchase of $313 million at the same rate on 15 July. 

The Bangladesh Bank bought $10 million on 23 July at a higher cut-off rate of Tk121.95. On 7 August, it bought $45 million at a rate of Tk121.35-121.50, marking a reduction of at least 45 paisa compared to the 23 July rate.

The central bank is buying dollars to set a signal rate for the market, preventing a rapid depreciation of the dollar, officials say.

A senior official from the central bank's auction committee told The Business Standard last week that both a sharp rise and a sharp fall in the dollar rate are unfavourable. "We are taking necessary steps to keep the exchange rate stable to support our exporters and remitters," the official explained.

A deputy managing director of a leading private bank commented that the banking sector is currently experiencing a higher-than-needed inflow of dollars. 

He explained, "We are receiving an average of $2.5 billion in remittances and exporting $4 billion each month, bringing our monthly inflow to around $6.5 billion. 

"In contrast, our monthly import bill has dropped to $4-4.5 billion, as investment-related imports have decreased. 

"This excess inflow is causing the dollar rate to fall, and the central bank's market intervention is preventing a sharp decline."