Central bank’s record dollar purchase

Bangladesh Bank has purchased a record amount of dollar from the market, highest in recent times, to keep exchange rates stable.The central bank has purchased over $5.1 billion during the 2012-13 fiscal year. The trend continued even in July – the early phase of 2013-14 fiscal.
According to an apex bank figure it had brought $155 million in the first ten days of July.
A dollar traded for Tk 77.75 on Wednesday. The rate was Tk 81.85 in Jun 30 last year.
It is an increase of 5.5 percent over one year and nine percent in a year and half.
Simultaneously in neighbouring India, rupee rates were falling against dollar. In the last month, rupee slid four percent against a dollar.
Economists and bankers said that if dollar was not taken out from the market, the exchange rate of taka would have fallen. A dollar would have traded lesser against taka.
In that case, it would have a negative effect on export earnings and remittances.
Bangladesh Bank Forex Reserve and Treasury Management division General Manager Kazi Saidur Rahman said the purchase of dollar was to keep a positive flow of export earnings and remittances.
Disclosing the dollar purchase info he said, the dollar rate is constant over the last month. I hope it will not fall further.
Bangladesh Institute of Development Studies (BIDS) Research Director Zaid Bakht said that the apex bank’s move was an ‘intervention’ in the monetary market.
“The export revenues, remittance and aids have increased supply of dollar in the market, that’s why its rate is falling. The central bank thought the slide will rein the flow of remittance and export earnings.”
The 2012-13 fiscal, which ended in June, saw record $14.46 billion inflow of remittance from abroad – a 12.6 percent more in comparison to the preceding fiscal.
Largely because of this remittance, the forex reserve touched $15.32 billion on Wednesday, which is an all time high. – UNB

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