Cenbank gains Tk27,761cr from taka devaluation in 9 months FY23

The Bangladesh Bank earned Tk27,761 crore in foreign currency revaluation gain in the first nine months (July to March) of FY23 – the highest ever in a single fiscal year – as taka has been depreciated largely against the dollar, officials familiar with the matter told The Business Standard.

The revaluation gain was Tk26,300 crore in FY22, according to the Bangladesh Bank annual report, riding on which the central bank's profit amounted to Tk29,247 crore that year. The trend has been continuing amid rising greenback prices.

The gain from foreign currency revaluation was only Tk2,605 crore in FY21.

Illustration: TBS

The central bank built up the country's foreign exchange reserves by buying dollars from banks at the rate of Tk86-Tk93 previously, which has been being sold at Tk100-104 to banks in this fiscal year amid a dollar scarcity, causing huge exchange gains for the authorities.

Although the profit from the taka devaluation came at the cost of the entire country's sufferings, the earning has no use as the exchange gain is not distributable profit and the Bangladesh Bank keeps the earnings in its permanent account.

"If the country's dollar exchange rate increases, people are the victims, because they have to buy overpriced products due to higher import costs," a senior central bank official, wishing to remain unnamed, told The Business Standard.

"The foreign currency revaluation gain is debited and credited to a particular account. When there is a gain, its amount increases and when there is a loss, its amount decreases," Bangladesh Bank Executive Director and Spokesperson Md Mezbaul Haque told TBS.

"There is no scope to use the profit as the central bank's reserves are low. The profit came due to higher dollar prices. But there are chances to fall the dollar price again," he added.

The country's reserves hit a record high of $48 billion in August 2021. Since then, the reserves have continued to decline due to rising import costs amid the Covid-19 reopening and subsequent Ukraine-Russia war.

The central bank has sold about $12 billion worth of dollars until 9 May this fiscal year. It was $7.62 billion during FY22.

According to the latest data, the country's foreign exchange reserves stood at $29.78 billion on Tuesday.

The International Monetary Fund has provided 38 conditions to provide $4.7 billion in loans to Bangladesh. Some of the major conditions are to have a uniform exchange rate, to increase lending rates and to show the forex reserve as a net reserve.

The central bank further increased the dollar rate following the conditions. The rate was Tk104.5 per dollar on Tuesday.