Staff Reporter :
The US dollar continued its relentless upward march against the local currency (Taka) on Tuesday with the greenback gaining Tk 6 to Tk 8 in the open market, popularly known as “kerb market”.
The US currency was traded at Tk 112 in the kerb market, reaching all-time high against the local currency in wake of depleting foreign exchange reserves, caused by record high current account and trade deficit and declining inflows of remittances.
The greenback was sold at Tk 104 to Tk 106 on Monday, according to currency dealers.
“There is a shortage of dollars in the market and so it continues to gain against taka. On Tuesday, dollar was sold at 112 in the open market,”Anisuzzaman, owner of Motijheel Jamuna Money Exchange, told The New Nation.
He added, “We have never seen such a jump in dollar rates in a single day. The price of dollar continued to soar due to demand and supply mismatch in the market.”
Anisuzzaman further said that many people came to buy dollars yesterday, but it was not possible to sell the greenback to everyone amid severe shortage of the US currency in the open market.
Currency traders said there is a dollar crisis in the open market like banks because the arrival of expatriates and tourists in the country has decreased in the wake of fresh Covid-19 surge. Because of this, the supply of dollars is low in the kerb market. “The dollar crisis also
prevails in the banking channel,” they added.
In the interbank yesterday, the US dollar was traded at Tk 105.
On July 21, the interbank US dollar rate stood at Tk 94.45, compared to Tk 84.80 on August 1 last year.
Between July last year and May this year, imports stood at $81.5 billion, up 39 per cent from a year earlier, according to data from Bangladesh Bank.
As a result, the current account deficit, the shortfall between the money received by selling merchandises to foreign countries and the money spent to buy goods and services from overseas — widened more than six times to $17.2 billion in the first 11 months of fiscal 2021-22.
Such a situation caused erosion in the country’s foreign exchange reserve, prompting a cash dollar crisis in the banking system.
The falling reserve also led to a significant devaluation of the local currency against the US dollar. Taka depreciated by Tk 9.65 or 11.38 per cent against the dollar in the one-year period.
Experts predict that the local currency will remain under pressure in the days to come due to high dollar demand for import payments.
“The rise in the US dollar and pressure on the local currency were caused by widening current account deficit and rapidly depleting foreign exchange reserves,” said economist Dr Ahsan H Mansur.
He said the foreign exchange reserve held by the Bangladesh Bank (BB) remains under tremendous pressure due to high import cost. Bangladesh had to pay a record $83.68 billion for imports through letters of credit (LCs) in the immediate past fiscal year.
“A fresh boost in economic activities following the recovery from the Covid-19 pandemic and the Russia-Ukraine war have caused price hike in food, commodities and industrial raw materials globally, leading to high import costs,” he added.
Dr Mansur mentioned that export earnings and inward remittances have not been enough to fill the existing current account and trade deficit. And so, the dollar crisis persists in the country’s forex market.
The central supplied a record $7.47 billion to the banks between July 1 and June 28 last fiscal year to ease the dollar crisis and prevent the depreciation of local currency.
On Monday, Bangladesh Bank (BB) sold $132 million to the banks at Tk 94.7 for each dollar, up by Tk 0.25 from Sunday, said BB spokesperson Md Serajul Islam.
On Jul 21, the interbank US dollar rate stood at Tk 94.45, compared to Tk 84.80 on Aug 1 last year.
The central bank on Monday sold $132 million to the banks at Tk 94.7 each, up by Tk 0.25 from Sunday, said the Bangladesh Bank’s spokesperson Serajul Islam.
The sale of the US dollar led the reserves to shrink further to $39.61 billion.
In August last year, the foreign exchange reserve stood at $48.02 billion, the highest in the country’s history. On July 20 this year, it fell to $39.67 billion, the lowest in two years.
