Bangladesh Bank (BB) has resumed purchasing US dollars from commercial banks through auctions, primarily to prevent the exchange rate from dropping too low in the domestic market.
On November 30th, the central bank bought $54 million at a rate of Tk 122.25 per dollar. This latest purchase pushed Bangladesh Bank's total dollar acquisitions in the current fiscal year (FY) past the $2 billion mark as of November 30th.
Large government external debt payments have decreased, easing overall dollar demand compared to previous weeks.
Low business activity and investment have resulted in a decline in the import of capital machinery. Private-sector credit growth hit a record low of 6.29% at the end of September.
Remittance inflow, particularly towards the end of the month as salaries are paid abroad, has increased the dollar supply at banks relative to demand. Remittance inflow reached approximately $2.69 billion by November 29th.
Bangladesh Bank's intervention at Tk 122.25 signaled to the market that the exchange rate should not be allowed to fall below this level.
Experts, like Professor Mustafizur Rahman of CPD, support BB's strategy, noting that a higher dollar rate boosts remittance and export earnings, which is critical given the low business investment.
Bankers expect low dollar demand to continue into the first ten days of December, but pressure may rise again in mid-December.
Governor Ahsan H Mansur confirmed that banks currently have an adequate dollar supply, stating that the market is currently stable—perhaps "more stable than necessary."
