The exchange rate of Bangladesh currency depreciated significantly against the US dollar in the last couple of days mainly as higher demand for the greenback for settling import-payment obligations dragged the taka down.
According to market operators, the Bangladesh Taka (BDT) lost its value by 35 poisha on the inter-bank foreign-exchange market in the last three working days in such a fall after more than a year.
The dollar was quoted at Tk 85.15 each on the inter-bank market on Monday against Tk 85.10 of the previous working day. It was Tk 84.80 last Tuesday.
"Depreciation of BDT started on Wednesday afternoon to meet a growing demand for the US currency on the market," a market-insider told the FE.
He also said the exchange rate of the local currency also depreciated significantly against the dollar at the customer level for settling import payments.
The exchange rate of the dollar was quoted a maximum of Tk 85.25 each for the sale of bills for collection, generally known as BC, on the day against Tk 85.20 of the previous level. It was Tk 84.95 on Tuesday.
On the other hand, the banks quoted dollar at around Tk 84.25 on the day against Tk 84.20 of the previous working day to the remitters for telegraphic transfer (TT) clean of their funds. It was Tk 83.95 on Tuesday.
Meanwhile, the central bank has already started selling the US dollar on the market indirectly through different commercial banks, they added.
As part of the stabilization move, Bangladesh Bank (BB) sold US$100 million to two commercial banks during the period under review to meet the growing demand for the greenback.
"We've extended our foreign-currency liquidity support to the banks to settle their genuine import-payment obligations," a BB senior official told the FE.
He also said the central bank may continue providing such foreign- currency support to the banks in line with the market requirement.
Talking to the FE, Syed Mahbubur Rahman, former chairman of the Association of Bankers, Bangladesh (ABB), said it would help in export earnings as well as the flow of inward remittance.
"But import cost will also go up," Mr Rahman, also managing director (MD) and chief executive officer (CEO) of Mutual Trust Bank Limited, explained the knock-on impact of the lower exchange rate of the taka.
The BDT's latest depreciation came against the backdrop of falling trend in the export earnings along with flow of inward remittances in July 2021.
Bangladesh's overall export earnings decreased more than 11 per to $3.47 billion in July, the first month of the current fiscal year (FY), from $3.91 billion in the same period of the previous fiscal year, according to the latest data released by the Export Promotion Bureau (EPB).
On the other hand, the flow of inward remittances dropped nearly 28 per cent to $1.87 billion in July from 2.60 billion in the same month of the previous fiscal year following the second wave of the ongoing Covid-19 pandemic.
The country's overall import payments, however, jumped by nearly 20 per cent to $60.68 billion in July-June period of FY '21 from $50.69 billion in the same period a year earlier.