Higher government payment obligations, particularly large payments by the Bangladesh Petroleum Corporation (BPC) and Petrobangla, have driven up demand for dollars.
Representational image of US dollar banknotes. Photo: Courtesy
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Representational image of US dollar banknotes. Photo: Courtesy
The dollar continued to appreciate against the taka yesterday, with commercial banks buying it from remittance houses at up to Tk124.70, despite Bangladesh Bank’s efforts to stabilise the foreign exchange market.
The central bank called an auction to sell $100 million from its reserves but ultimately made no sale, as market rates were reportedly higher than its desired price, bankers said.
Banks bought dollars at Tk124.55-124.60 yesterday, while some paid Tk124.70. The dollar has gained around Tk1.90 against the taka in two and a half months, from Tk122.70 in mid-August. The LC settlement rate also rose to Tk124.80 on Tuesday from Tk124.50 on Monday.
Bankers said bids at yesterday’s auction ranged from Tk124.35 to Tk124.75, but the central bank was unwilling to sell at the likely cut-off rate of Tk124.60. It had sold dollars from reserves at Tk124-124.30 in its previous intervention.
Last week, the Bangladesh Bank sold $122 million against commercial banks’ demand for around $800 million, but the limited supply failed to ease market pressure. A senior central bank official told TBS the intervention aimed to prevent the dollar from crossing Tk125.
Infographic: TBS
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Infographic: TBS
Higher government payment obligations, particularly large payments by the Bangladesh Petroleum Corporation (BPC) and Petrobangla, have driven up demand for dollars. Bankers also cited rising global fuel prices, which have increased import costs.
Syeed Mahbubur Rahman, managing director of Mutual Trust Bank, said, “Remittance inflows have declined, while export earnings have also fallen short of expectations. There is also additional pressure from government LC payments.”
Bangladesh Bank data show fuel import payments doubled year-on-year to $2.50 billion in the first two months of the current fiscal year, from $1.25 billion. In September, banks opened LCs worth more than $8 billion and settled payments exceeding $6.5 billion.
Meanwhile, remittance inflows remained below $3 billion for a second consecutive month, with expatriates sending $2.77 billion in September and $2.87 billion in October. September’s inflow was the lowest in 11 months.
Several senior Bangladesh Bank officials warned that the dollar could rise further if remittance inflows remain weak in November. Bankers said pressure from fuel import payments could continue until 15 November.
A senior commercial bank official said the central bank’s $122 million sale last week had little impact, as the dollar rate rose further the following day. The official said Bangladesh Bank needed a more prudent approach to managing the exchange rate.
Despite a large trade deficit, Bangladesh recorded a current account surplus of $599 million in the first two months of FY27, supported by 19% growth in remittances in July-August. A senior Bangladesh Bank official warned that any major disruption to remittance inflows could undermine the surplus.
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