Central Bank buys $83 mn from 11 banks to keep dollar stable

Dollar 100 currency notes

Dhaka, Aug 10 - Bangladesh Bank has purchased US $83 million from 11 commercial banks through a multiple-price auction to keep the foreign exchange market stable.

The exchange rate for the transaction ranged from Tk 121.47 to Tk 121.50, with the cut-off rate set at Tk 121.50.

Arif Hossain Khan, an Executive Director and spokesperson for Bangladesh Bank, confirmed the purchase on Sunday.

He stated that out of the total, $12 million was bought at a rate of Tk 121.47, while the remaining $71 million was acquired at Tk 121.50.

A senior central bank official described the purchase as a "normal process" and a strategic move to manage the market.

"The governor has stated on multiple occasions that the central bank will buy dollars from the market if necessary. The bank will also sell dollars to commercial banks based on demand. This is a strategic step to control the market," the official said.

This recent purchase follows similar actions on July 23. The central bank bought $10 million at a rate of Tk121.95. Additionally, in auctions on July 13 and 15, it acquired $173 million and $313 million, respectively, at a rate of Tk 121.50.

This brings the total amount of dollars purchased by the central bank through the ongoing auction process to $579 million.

The Central Bank, meanwhile has relaxed the foreign currency rules for exporters in specialized zones like Export Processing Zones (EPZs), Private Export Processing Zones (PEPZs), Economic Zones, and High-Tech Parks to retain foreign currency.

This move is aimed at simplifying foreign exchange management and streamlining transactions for these businesses.

The central bank issued a circular on Sunday, (August 10), stating that Type B and Type C factories within these zones can now hold their export earnings in a foreign currency account until their back-to-back import liabilities are settled.

The foreign currency can be divided into two portions: one for back-to-back import payments and another for the value addition portion of local production.

The local value addition portion can be held as dollars for a maximum of 30 days. If the funds are not spent within this period, they can be transferred to another bank to cover the company's import liabilities.

After 30 days, any unused dollars must be converted into Bangladeshi Taka. The remaining balance—after converting 20 percent of total export earnings (or 25 percent for the garment sector)—can be held in the exporter's foreign currency account.

Exporters who do not use the back-to-back Letter of Credit (LC) facility can also hold dollars for up to 30 days for essential expenses. Any unused foreign currency must be converted into Taka after this period, following the same procedure.

According to industry insiders, this decision will enable exporters to conduct transactions more easily and manage their dollars more effectively. The new regulations are also expected to create a level playing field between exporters in specialized and general zones. - UNB