Taka deflates further against US$

FT ONLINE

The exchange rate of Bangladesh Taka (Tk) depreciated further against the US dollar (US$) on Thursday, despite the central bank's foreign currency support to the commercial banks.

The local currency depreciated by three paisas on the day, mainly due to higher demand for the greenback, according to the market operators.

The US$ was quoted at Tk 83.83 each in the inter-bank foreign exchange (forex) market on Thursday against Tk 83.80 of the previous working day.

The exchange rate of Tk depreciated by five paisas against the greenback in the inter-bank forex market last week on the same ground, they added.

The US dollar was quoted at Tk 83.80 in the inter-bank foreign exchange market on Wednesday last week (Oct 3) against Tk 83.75 on Sunday (Oct 7), the first working day of this week.

Meanwhile, Bangladesh Bank (BB) has strengthened its foreign currency support to the banks for settling import payment obligations, particularly of fuel oils and capital machinery.

As part of the move, the central bank sold $53 million directly to the banks this week, ending on Thursday, to meet the growing demand for the greenback in the market.

Of the amount, $20 million was sold to four state-owned commercial banks at market rate on Thursday, whereas $33 million was provided as foreign currency support to the banks on Tuesday.

BB similarly sold $45 million to the banks last week on the same ground.

"We're providing foreign currency support to the banks for settling the import payment obligations, particularly of fuel oil and capital machinery for setting up power plants," a senior BB official told the FE.

The central bank may continue providing such foreign currency support to the banks in line with the market requirements, he hinted.

A total of $253 million has been sold to the commercial banks since July 01 of the current fiscal year (FY), 2018-19, as part of its ongoing support, according to him.

The central bank provided foreign currency support to the tune of $2.31 billion to the banks to settle their import payments in FY 18. It was $175 million in FY 17.

The market operators, however, said the demand for the US dollar is increasing gradually, mainly due to higher import payment pressure, particularly of petroleum products and capital machinery.