Taka devalued for third time in a month to Tk94.70

The Bangladesh Bank has devalued taka against the dollar for the third time in a month by Tk0.25 as the greenback continues to appreciate in the market.

The new interbank exchange rate was set at Tk94.70 per dollar on Monday, raising the rate from the previous Tk94.45.

The central bank said it sold $132 million to banks at the new rate. Since 1 July of the current fiscal year, more than $700 million has been sold from the reserve.

Earlier on Thursday, the central bank depreciated taka by Tk0.50 to Tk94.45 against the dollar. The dollar price was increased again in a span of one working day.

The central bank says the value of taka is being reduced in order to adjust it to the actual value of the dollar. The central bank is providing dollar support to banks for settling import bills of daily necessities such as fuel, electricity and food products as well as government purchases.

In the last one and a half months, taka has lost value by Tk5.70, according to data from the Bangladesh Bank.

At the beginning of June, the interbank exchange rate was Tk89 per dollar.   

Despite faster devaluation, the dollar rate in the market is still very high forcing banks to settle LC (Letter of Credit) payments at a maximum of Tk104 per dollar on Monday.

Contacted, a top executive at a private bank said that most banks settled LCs at over Tk102 but LC value over $0.5 million was settled at Tk104.

The dollar price in the kerb market hovered between Tk106 and Tk107 on the day, according to bankers.

The head of the treasury department at a private bank told The Business Standard that the number of the opening of new import LCs has decreased slightly but the pressure of settlement of LCs opened a few months ago is now coming.

"There is also a shortage of dollars in the market. We have to collect dollars from exchange houses at very high prices. Due to these reasons, we have to increase the price of LC settlement as well," he added.

Dollar hits record Tk106 in kerb market

The price of the dollar in the kerb market has risen to an all-time high of Tk106. Besides, money changers bought dollars at Tk105-105.50. The previous day, on Sunday, the dollar price rose to Tk105. This was the highest dollar price in the kerb market until Monday. The dollar made a new record in the kerb market within a day.

Money changers in the Motijheel, Paltan and Baitul Mukarram areas of the capital said due to the shortage of dollars in the market, many traders are not willing to sell the greenback even at Tk106. They are asking for Tk107 per dollar. As the reason, they say they are not able to buy dollars even at Tk105-106.

Reserves crossed the Tk48 billion mark in August last year due to a decline in imports. However, due to the increase in the prices of goods in the world market along with the increase in imports, as much as $7.62 billion were sold from the reserves to the banks in the last financial year to pay import bills.

This trend of selling dollars continues in the current financial year as well. Due to these reasons, the reserves fell below $40 billion.

Along with regular monitoring, the central bank has also taken several steps to control imports. It has fixed a 100% LC margin on the import of 27 products such as cars and refrigerators and even increased the import duty on some products.

At the same time, the Bangladesh Bank is also trying to increase the supply of dollars in the market.

As part of this, the central bank has also decided to halve the deposit limit in the exporter's retention quota (ERQ) account, encash 50% of the money deposited in the ERQ account, reduce the dollar holding limit (Net open position – NOP) of banks, and transfer the foreign currency funds of offshore banking units to domestic banking units.