The exchange rate of the US dollar hit record Tk 112 on the informal market, known as the kerb market, on Tuesday amid instabilities on the country’s foreign exchange market.
Exchange houses sold the greenback for Tk 110-112 on the day after selling it at Tk 105 on Monday.
The central bank continued providing the country’s scheduled banks with foreign currency support for managing the current exchange rate volatility.
The BB injected $50 million in the financial market on Tuesday after $132 million on Monday to help the banks meet the demand for the dollar.
The dollar was sold to the banks at the rate of Tk 94.70 on the day.
The BB has injected $990 million from the reserve directly into the commercial banks as liquidity support for settling their import-payment obligations in the first 26 days of the current financial of 2022-23.
Due to the sales of dollars, Bangladesh’s foreign exchange reserve came down to $39.61 billion on Tuesday from $48.06 billion in August 2021.
The high exchange rate in the banking system increased the demand for the greenback on the informal market as well, said officials of exchange houses.
The banks brought export proceeds and remittance at Tk 101-103 recently, so, the importers had to import products at higher rates that eventually affected the prices of the products.
Dollar demand in the country’s banking system has been on the rise from the very beginning of the financial year 2021-2022.
A high import payment-induced record surge in trade deficit was responsible for the dollar market instability.
In addition, a number of countries have been struggling with financial crisis that was reducing export orders of Bangladesh and were also raising production costs.
The remittance inflow was in downward trend also.
So, the banks had to settle import payment obligations at high dollar prices.
On the formal market, the exchange rate of the US dollar was Tk 84.80 in August of FY22 and the rate rose to Tk 94.7 on Tuesday.
Though the government and the central bank took a number of measures, the demand for the US dollar remained very strong amid high trade deficit-driven depletion of foreign exchange reserve at an alarming rate.
With the latest decline in interbank exchange rate of dollar, the taka has depreciated by Tk 9.9 since August 2021 when the exchange rate was Tk 84.8.
If $7-billion export development fund formed with the foreign exchange reserve is excluded, the country’s foreign exchange reserve would go below $33 billion.
In July-May of FY22, the country’s imports stood at a record high of $ 75.4 billion, up 39.03 per cent from $54.23 billion in the corresponding period of FY21. Though the country’s export earnings exceeded $52 billion in FY22, the country’s overall trade deficit rose to a record high above $30 billion.
