Dollar gains Tk1.8 as BB buys at higher rates, lifting market floor
Commercial banks today raised their buying rates for remittance dollars to as high as Tk120.80, up from Tk119 the previous day
Highlights:
- In a first, BB bought dollars at auction after a recent sharp Tk3 drop
- Central bank bought $171 million from banks at Tk121.50 on Sunday
- Remittance dollar rates rose to Tk120.80 on Monday from Tk119 on Sunday
- BB says dollar purchases will happen only as needed, no fixed daily limit
The US dollar gained as much as Tk1.8 in a single day on Monday, after the Bangladesh Bank lifted the market floor by purchasing greenbacks from banks at a higher rate through a historic auction.
Following the central bank's move to buy $171 million at Tk121.50 per dollar on Sunday — its first-ever dollar purchase through an auction — commercial banks on Monday raised their buying rates for remittance dollars to as high as Tk120.80, up from Tk119 the previous day.
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The move signalled a clear intention by the central bank to stabilise the exchange rate after a sharp Tk3 drop over the last week, according to bankers.
No auction took place on Monday, yet the effects were evident as banks raised their buying rates in the remittance market.
Md Kabir Ahmed, deputy governor of Bangladesh Bank, told TBS, "We have not set a fixed limit on the amount of dollars we intend to purchase from the market. We won't intervene daily — auctions will be held only when market conditions make it necessary."
A private bank's deputy managing director said that when the central bank buys dollars at a higher rate, the market naturally moves up. However, despite the central bank buying at Tk121.50, the dollar did not stay above Tk121 on Monday due to low demand.
A senior official of another commercial bank said banks buy dollars from remittances and export proceeds. On Sunday, the average purchase price was around Tk120, while dollars were sold for import settlements at Tk121.50. On Monday, the average buying price rose to Tk120.50–Tk120.80, with selling rates near Tk122, an increase of 50-80 paisa.
Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank, said the central bank's higher auction rate established an indicative market price close to the real effective exchange rate (REER), leading to a modest increase in the dollar on Monday.
He added that it is too early to draw definitive conclusions and that further monitoring is necessary.
An exchange house country head told TBS that banks remain cautious, with some holding long net open positions (NOP) and limiting dollar purchases. Banks with short positions have bought dollars since the central bank's move, but overall demand stays low.
A managing director of another bank said dollar demand isn't rising due to low import LC openings and minimal investment, limiting imports mainly to essential consumer goods. Overdue import payments have cleared, so dollar demand won't spike soon.
Meanwhile, strong remittance inflows and export proceeds have boosted dollar supply, leading to a drop in dollar prices, he added.
