BB continues to buy more dollars in auction for market stabilization
Business Report :
Bangladesh Bank has purchased another $104 million at a rate of Tk 121.80 per dollar at from commercial banks through an auction on Monday in its latest effort to stabilize the foreign exchange market amid signs of excess supply.
Bangladesh Bank’s spokesperson and Executive Director Arif Hossain Khan confirmed the information to the media.
With the latest intervention the central bank has, so far, bought US dollars amounting to $1.98 billion through auctions.
Earlier, on 22 September central Bank purchased $129.5 million more from commercial banks through another auction at Tk121.75 per dollar, followed by $353 million purchase on September 15 by from more than 10 banks with exchange rates ranging between Tk121 and Tk121.75 under the Multiple Price Auction method.
In the mid of July month the exchange rate of the American greenback continued to fall against the local currency.
To tackle the sharp fall, the banking regulator on July 13 bought $171 million from 18 commercial banks through an auction – the first such move under the floating rate system.
A senior official of the central bank told The New Nation that BB has intervened in the market by purchasing US dollars from commercial banks through an auction aiming to keep the exchange rate of the BDT against the greenback stable.
Increased remittance inflows and export earnings have boosted dollar flows in banks. After selling dollars to other banks, these banks are also selling excess dollars to the central bank, which adds to the reserves, he informed.
As a result of these dollar purchases through auctions, the country’s foreign exchange reserves have increased to $26.62 billion.
He also said the central bank will sell the US dollar to banks through similar auction if the exchange rate of the greenback increases against the local currency.
Some experts however, criticized the central bank’s move amid high inflation in Bangladesh, arguing that allowing the dollar rate to drop further could help contain inflation. Bringing the rate down from Tk 120 to around Tk 110 could have made a remarkable difference in taming inflation. Currently, the auction system provides advantages for exporters and remittance recipients while allowing the central bank to bolster its foreign reserves.