Taka getting stronger

Country Today Desk

Bangladeshi taka has become stronger with increasing remittance inflow and policy measures taken by Bangladesh Bank.

Dollar value dropped to Tk 110 in the open market on Thursday from Tk 120 in corresponding day of previous weekend, according to money changers.

The official inter-bank rate for dollar is Tk 95. Bangladesh Bank is selling dollars to the banks at this rate to help meet the import bills. However, commercial banks are now selling cash dollars at 106 to 108 taka.

Bangladesh Bank’s multi-faceted initiatives are positively affecting the dollar market. It is assumed that the demand for dollars will decrease further from next week. This will further reduce the price of the dollar in the open market.

Economists and bankers hope that the appreciation of taka will continue in coming days as the supply of dollars in the market has increased due to steady remittance inflow and a fall in import.

Agrani Bank Chairman Zaid Bakht termed the appreciation of taka as price correction caused by policy measures taken by Bangladesh Bank.

“I don’t see this as appreciation. There was some speculative demands of dollar in market. A group of people tried to create artificial crisis by hoarding dollars. It will stabilize gradually after reaching near Tk 100 exchange rate,” Dr Zaid, a former research director at Bangladesh Institute of Development Studies (BIDS), told the Daily Sun.

Policy Research Institute (PRI) Executive Director Ahsan H Mansur thinks the multi-sector measures should continue as the appreciation of taka gives good signal for economy.

“I hope, it (appreciation of local currency) will continue. However, the central bank should handle the situation with monetary policy. Interest rates should be increased for taming inflation as the economic indicators are closely related with currency markets,” Dr Mansur, a former staff of International Monetary Fund (IMF), told the Daily Sun.
Bangladesh Bank issued show-cause notices to the managing directors (MDs) of the six banks following the instructions regarding the removal of the treasury-heads of the six banks.

Meanwhile, Bangladesh Bank is taking a tough stance on at least 10 other banks that have made abnormal profits from dollar trade.

A drive is underway to nab those responsible for the manipulation in exchange rate.

The central bank has determined the spread in dollar buying and selling for money changers. In this case, the gap between banks and money changers will be maximum Tk 1.5. Banks can buy dollars and sell them at a maximum profit of Tk 1.

This decision was taken in a meeting between Bangladesh Bank and Bangladesh Foreign Dealers Association (BAFEDA) on Wednesday (August 17).

Before this, the dollar holding capacity of banks and exporters has been reduced to increase the supply of dollars in the market.

Restrictions have been placed on the transfer of export earnings of one bank to another bank to control the dollar rate.