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Dollar price jumps to Tk87.50

17 May 2022

Staff Reporter :
The inter-bank exchange rate of  dollar hit Tk 87.5 after the central bank devalued local currency by Tk 0.80 on Monday.
The demand for the US dollar has risen sharply due to the pressure on imports, which makes instability in the market.
Meeting the growing import cost, the BB is selling dollars from reserve in regular basis and devaluing taka against dollar in order to control money market.
The central bank has so far depreciated the taka five times in this year.
Prices of consuming goods, raw materials and oils have risen in the international market as well as shipping charges. As a result, the import cost has increased by 44 per cent, which put pressure on foreign exchange reserve.
Besides, balance of payment is widening gradually as export is not increasing as much as import. On the other hand, the expatriate income has also decreased and the soaring import payments have created an acute shortage of the greenback in the banking sector.
With the available reserves, it is possible to meet the import cost of five and a half months. If import costs continue to rise in this way, the reserves will go down further and it may fall the country into a big crisis.
Keeping the situation in mind, the Bangladesh Bank (BB) depreciated the inter-bank exchange rate by Tk 0.80 to Tk 87.5 per US Dollar.
The exchange rate of the taka stood at $85.8 a dollar on December 30 and $84.8 on May 16 last year, according to data from the central bank.
Economists have frequently urged the central bank to depreciate the local currency by Tk 5-6 per dollar immediately.
The shortage of the greenback has already created instability in the foreign exchange regime, which is why the BB now tries to restore discipline in the market by depreciating the local currency, a BB official said.
The banking regulator has also increased the BC (bills for collection) selling rate by Tk 0.85 to Tk 87.6 a dollar and banks are supposed to follow the rate while selling dollars to the importers.
But officials of two commercial banks, on condition of anonymity, said they are yet to follow the selling rate because of the shortage of the greenback.
Banks are charging more than Tk 95 for every US dollar from the importers.
Bankers blame the rising import payments for the ongoing volatility in the foreign exchange regime.
The ongoing Covid-19 pandemic had disrupted the supply chain around the world, which subsequently pushed up the commodity prices in the global market.
The Russian invasion of Ukraine has deepened the crisis.

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