BB raises its dollar selling rate by Tk1

The Bangladesh Bank has raised the rate of dollars sold from its reserves by Tk1 to Tk97, deviating from its own floating exchange rate decision.

Since July this fiscal year, the Bangladesh Bank has raised the dollar rate eight times. On Wednesday, it sold $80 million to state-owned banks for settlements of government's import payments at the new rate.

Earlier on 12 September, the central bank set the dollar price at Tk96.

All banks are following floating rates in interbank and customer transactions, but the Bangladesh Bank is going with its own rate when it comes to selling dollars from its reserve. 

Seeking anonymity, a central bank high official told The Business Standard that the new rate that the central bank has fixed for selling dollars from its reserve is called Bangladesh Bank's dollar selling rate.

"We have raised the rate to Tk97 in keeping with the interbank market," he noted.  

But the new rate has not been published on the central bank's website. 

According to central bank data, dollar sales to banks amounted to $4.02 billion in two and half months of the current fiscal year. In FY22, the central bank injected $7.62 billion into the banking system from its forex reserve that now stood at around $36.5 billion as of yesterday.

The rate at which the central bank sells dollars to banks was regarded as the interbank exchange rate. 

Banks had refrained from dollar transactions among themselves because dollar rates were not adjusted in line with supply and demand in the market amid the severe dollar crisis. 

In such a situation, the central bank devalued taka several times, but to no avail as the interbank forex market continued to remain inactive. 

At the beginning of the current year, the dollar rate was Tk85.8, which increased to Tk95 as of 11 September with several devaluations.

Upon instructions from the central bank, in a meeting on 11 September, Bangladesh Foreign Exchange Dealers Association and the Association of Bankers, Bangladesh capped the dollar rates at Tk108 for remittance inflows and Tk99 for export proceeds as part of an effort to curb volatility in the country's foreign exchange market.

On the same day, the Bangladesh Bank relaxed its directive to follow its fixed dollar rate of Tk95 for interbank transactions. 

Then, the interbank forex market, which had remained inactive for the five months amid high exchange rate volatility, resumed on 12 September with sales of dollars at Tk103.50 each after banks fixed uniform rates for exporters and remitters.

And, on the same day, the Bangladesh Bank began publishing the floating rates as the interbank dollar rates instead of the rate at which it sells dollars to banks.

The central bank also raised its rate of selling dollars to banks by Tk1 to Tk96. But it does not publish this rate on the website.

Former governor Salehuddin Ahmed told TBS, "We are now following a managed floating rate. The rise in the central bank's dollar selling rate signals a possible devaluation of taka."