Taka becomes stronger against foreign currencies

Low import demand, coupled with high remittance inflow, has been instrumental in making the Taka stronger against the US dollar in the past one month. The Taka has also regained against almost all other prominent foreign currencies, including the GBP (Great Britain Pound) and the Euro. According to Bangladesh Bank (BB) statistics, the exchange rate came down to Tk. 81.69 against one US dollar on February 23. The highest inter-bank exchange rate was Tk. 86.25 for one US dollar on January 31, according to banking sector sources.

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The exchange rate for one GBP came down to Tk. 127.96 on February 23 from Tk. 133.45 on February 1. The Euro was being exchanged at Tk. 108.18 last weekend, down from Tk. 111.13 on February 1.

Speaking at the inaugural ceremony of the Online Export Monitoring System on Thursday, the BB governor, Dr Atiur Rahman, said that record remittance inflows and moderate growth in exports gave the country’s economy a healing touch by making a safe reserve of foreign exchange and ensuring adequate supply of foreign currencies in the domestic market.

Till last month, the economic status was believed to be gloomy owing to a high rate of inflation and unemployment, low foreign aid inflows and high demand for fuel import, which together created tremendous pressure on balance of payment.
“In the last couple of months, remittance inflow soared to record high, while export grew by 14.28 per cent amid the double-dip global economic crisis. As a result, the Taka has regained its strength,” he said.

The forex reserve stood at around USD 9.9 billion on February 23, according to BB statistics.

A BB official, opting not to be named, said the Taka is getting stronger because of adequate supply of US dollars in the market, backed by record remittance inflow and declining import demand.

Volatility in foreign currency exchange rates during December and January was not caused by only high demand for the greenback for imports, but also anomalies committed by banks, he said. A recent investigation by the BB has revealed some irregularities in buying and selling of foreign currency by some banks, he added.
According to regulations, banks must inform the BB about their purchase of foreign currencies from exchange houses, but some banks violated it. He said some banks took a rate higher than the rate declared for imports.

“Banks admitted their mistake and said they will not do the same again. However, we are yet to make a final decision on this. Further investigation is going on to find the number of actual incidents of irregularities,” said the official.

BB data shows that between February 1 and 22, the country received USD 722.42 million as remittances. In January this year, USD 1,215.80 million were remitted to the country, which was a record monthly highest. In December, total remittance inflow was USD 1,147.22 million.

During July 2011-January 2012, total export income of the country rose to USD 13.92 billion. The income was USD 12.18 billion during the same period in the previous year. The growth in 2011-12 was 14.28 per cent.

According to BB data, imports grew by 16.91 per cent in the first six months of the current FY. The growth was 41 per cent in the same period of the previous fiscal.

In November last year, letters of credit for import fell by 23 per cent, while in December it fell by a further 24 per cent. It fell by 27 per cent in January.

News Source: 
The Independent