Despite the coronavirus crisis, the foreign exchange (Forex) market remains stable as the central bank bought a record amount of US dollars directly from the commercial banks.
Exporters and remitters reaped benefits from the foreign exchange market by getting higher dollar rate as Bangladesh Bank (BB) continued its intervention in the market to prevent devaluation of greenback, experts said.
It also helps boost inflow of remittance and export earnings, they said.
However, the BB bought a record amount of around $7.7 billion US dollar from the banks during July-May period in the current fiscal year to keep the foreign exchange market stable amid the pandemic.
It was the previous highest in the fiscal year 2013-14 when the central bank bought $5.15 billion on the same ground, according to BB data.
Moderate export earnings, lower imports and high inflow of remittance increased the supply of US dollar in the forex market amid the coronavirus pandemic, market analysts said.
A BB senior official said the central bank has purchased the greenback from the banks aiming to protect the interests of the exporters and migrant workers by keeping the exchange rate of the local currency against the US dollar stable.
Experts said the central bank may continue the intervention in order to meet the market requirement until the economy recovers from the pandemic shock.
The US dollar purchase by the central bank is helping the export sector and remittance senders to prevent devaluation of US dollar, they added.
For the massive dollar purchase, foreign exchange reserve hits a record high to stand at $45.08 billion, which was 35 percent higher than in the corresponding period of the previous year.
On the other hand, the surplus liquidity in the banking industry witnessed a record growth to stand at Tk 2,00,000 crore in April.
Dr Atiur Rahman, former governor of Bangladesh Bank, told the Bangladesh Post, “The central bank has provided good support to the forex market that includes providing an easy system giving remittance to remitters as well as buying dollars directly from the market. This encouraged the expatriates to send money through legal channels including banks.
Bangladesh Bank's intervention is playing a vital role in protecting the interest of the exporters as well as the remitters amid the Covid pandemic, he added.
“This is the highest monthly remittance received in the country’s history that helped push foreign currency reserves up, which is helping rating of the country across the World,” he mentioned.
Atiur expects the country would continue having the excess dollar in the coming days due to the higher inflow of remittance.
Bankers said remittance may continue its upward trend in the upcoming months as the restriction on movement globally has largely broken the global hundi cartel.
Some economists attributed the growth in remittance inflow also to a government provision of 2 percent cash incentive to remitters on inward remittance for the last fiscal year.
Remittance flow hit an all-time high to cross $20 billion for the first time to stand at $22.8 billion during the July-May period.
On the other hand, the export earnings stood at $35.18 billion in July-May in the current fiscal.
The US dollar was quoted at Tk 84.80 in the inter-bank forex market on Sunday unchanged from the level of previous working day.
It was unchanged since long.
