Dollar price depends on demand, not govt: Finance minister

Finance Minister AHM Mustafa Kamal has said the value of the dollar depends on demand in the local market, not on government interventions.

"It is normal that the dollar will rally if supply is low," the minister said today after the cabinet committee meeting on public procurement.

On 25 October, the dollar crossed Tk90 for the first time ever in the kerb market after taka lost its value by Tk0.85 per dollar between July and October.

The interbank dollar exchange rate has picked up a rising trend because of growing market demand.  

"Every central bank of the world buy and sell dollars centrally during the time of crisis," said the finance minister, adding, "The International Monetary Fund (IMF) do provide with various suggestions on foreign exchange management but we take decisions as per our own policy."

According to the Bangladesh Bank, the interbank dollar exchange rate on Monday was Tk85.65. On the other hand, different money exchange houses traded the greenback at Tk89.9-Tk90.1 in the open market, according to local exchange houses.

When the dollar price began to go up in July this year, the interbank dollar exchange rate was Tk84.80, while the rate in the open market was Tk87-Tk88.

The continued rally of the greenback prompted the central bank to change its course – from buying to selling mode to help the forex market handle the sudden surge in demand for the greenback from importers and travellers.

The Bangladesh Bank bought a record $8 billion in fiscal 2020-21 amid low imports and high inflows of remittance. However, till 19 October of this fiscal year, the central bank has sold $1.68 billion to banks, according to the central bank's data.

Meanwhile, the finance minister also advised capital market investors to be aware of the risk zones and said no one should expect massive profits.

"Economy of a country is the fundamental base of the capital market, therefore, the market will only expand if the economy grows."