Kazi Zahidul Hasan :
Economists on Monday expressed grave concern over the sharp rise in dollar exchange rates in the recent months saying that the currency volatility is set to hit the economy adversely.
The average exchange rate of the dollar was around Tk 80.58 in June this year, but it rose to Tk83 this week.
In June 2016, the average exchange rate of the dollar was around Tk 78.40.
The average price quoted in the inter-bank foreign exchange market for the dollar yesterday was Tk 83.19.
“It is not anything unusual, but it is a matter of grave concern that the US currency is appreciated extraordinarily against the local currency,” Dr Zahid Hussain, World Bank’s lead economist in Dhaka, told the New Nation yesterday.
He said, the market for the US dollar has become unstable due to a number of factors, including rising import payment, sluggish exports and inward remittances and interest payment against foreign loans. “A persistent volatility in dollar exchange rate will fuel inflation further adversely affecting Bangladesh’s economy,” added Dr Zahid Hussain.
“The mismatch between demand and supply of dollar in the market is mainly responsible for exchange rate volatility,” Dr AB Mirza Azizul Islam, a leading economist of the country, told The New Nation yesterday.
He observed that trade deficit, sluggish export growth and decline in remittance earnings are among the factors contributing to the shortage of dollar supply.
A Bangladesh Bank (BB) data shows that the gross foreign exchange balances held by commercial banks stood at $2.90 billion as of end October 2017, which was lower than $3.13 billion of end September 2017. Mirza Aziz said the volatility in the currency market causes massive losses to both exporters and importers and can trigger inflation in the country. “The central bank has to intervene in the currency market to make sure that appreciation or depreciation of local currency against the greenback is taking place at a reasonable rate,” he suggested. “There is no chance of unusual fluctuations in the dollar exchange rate due to market forces. It does not shoot up if the currency supply remains normal. The currency market remains volatile as the market manipulators hike the exchange rate taking advantage of the supply shortage,” Toufic Ahmad Choudhury, Director General of Bangladesh Institute of Bank Management (BIBM) told The New Nation.
