Central bank buys $798m in January to stabilise dollar rate

To keep the dollar exchange rate stable, the Bangladesh Bank has purchased dollars from commercial banks through auctions. Since the supply of dollars has been rising relative to demand, the central bank has been buying dollars since July of the current fiscal year to prevent the rate from falling.

Today (29 January), the Bangladesh Bank bought $55 million from five commercial banks at a rate of Tk122.30 per dollar, Spokesperson Arif Hossain Khan told reporters.

With this purchase, the central bank has bought a total of $3.93 billion in the current fiscal year, including $798 million in January alone.

At a seminar on Monday, Bangladesh Bank Governor Ahsan H Mansur said commercial banks are voluntarily selling dollars to the central bank, which has increased the flow of taka in the market. 

He also cited the rise in dollar inflows as the main reason for deposit growth. According to him, the increased dollar inflow has helped Bangladesh achieve a surplus in its balance of payments, and greater foreign currency supply will continue to boost domestic deposits.

Bangladesh Bank began buying dollars as part of its strategy to intervene in the foreign exchange market. Under the market-based exchange rate system, the central bank aims to maintain balance – allowing the dollar price to fall when supply exceeds demand and giving it room to rise when demand increases.

Bankers said the recent decline in dollar demand is due to several factors, including a reduction in the government's large foreign payments, sluggish business activity, and weak investment, which has lowered imports of capital machinery and further eased pressure on the dollar.