BB Buys $45m to Stabilise Taka, Boost Reserves

File photo: Bangladesh Bank

In a bid to restore stability in the country's volatile foreign exchange market, Bangladesh Bank (BB) purchased another US$45 million from commercial banks on Thursday, continuing its recent intervention under the free-floating exchange rate regime.

With this latest transaction, the central bank has bought a total of $539 million from banks since it began its intervention on July 13, aiming to support the Taka and shore up foreign exchange reserves amid persistent pressure on the interbank exchange rate.

According to central bank officials, the $45 million purchase on Thursday was made at a cut-off rate of Tk121.50 per dollar, which marks a 45 paisa increase compared to the rate on July 24. The injection of over Tk5.5 billion into five commercial banks followed the transaction.

The move comes as the local currency continues to lose ground. Since July 13, the Taka has depreciated by Tk0.85 against the US dollar, with the reference rate rising from Tk120.67 to Tk121.52 as of Thursday evening.

Officials at the central bank said the intervention is aimed at containing excessive volatility in the dollar-taka exchange rate and keeping it within a “tolerable level”. They also hinted that the central bank may resume dollar sales if the greenback continues to appreciate rapidly.

"The market is being monitored closely. We intervene when necessary to ensure orderly market conditions," said a senior BB official, requesting anonymity.

Forex reserves stood at $30.08 billion on Wednesday under the gross calculation method. However, according to the IMF’s Balance of Payments and International Investment Position Manual (BPM6), the usable reserves stand at $25.06 billion, highlighting the ongoing pressure on Bangladesh’s external balances.

The BB’s recent dollar-buying drive also aligns with the International Monetary Fund’s (IMF) recommendations under its $5.5 billion loan programme for Bangladesh. The IMF has advised Bangladesh to maintain a more flexible exchange rate while taking steps to rebuild reserves and ensure macroeconomic stability.

The pressure on the reserves has stemmed largely from higher import payments and global financial uncertainties, including rising oil prices and tightening global liquidity.

BB's continued forex market intervention reflects its balancing act between maintaining currency stability and managing liquidity in the banking sector, amid heightened global and domestic economic challenges.