Taka devalues again as US dollar surges

The Bangladesh Bank has devalued the taka against the US dollar for the third time in two months,

The Bangladesh Bank has devalued the taka against the US dollar for the third time in two months to stabilise the currency market.
The US dollar exchange rate for interbank transactions was revised to Tk 87.5, up by Tk 0.80. On the open market, a dollar now costs a record Tk 97.
The difference between interbank and open market rates stands over Tk 9, the highest in Bangladesh’s history.
Banks sold dollars at Tk 86.45 until May 9. It rose to Tk 86.7 after the central bank devalued the taka by Tk 0.25 the following day.
Md Serajul Islam, the spokesperson for the Bangladesh Bank, said, “The open market economy now relies on the market for many things. Import is under more pressure compared to export. So, the banks are unable to meet the demand for the dollar, which is why dollar price has increased a bit.”
The decline of COVID-19 cases was met with a global hike in prices of commodities as the Russia-Ukraine war caused the supply and delivery costs to go up. As a result, the demand for dollars rose and the Bangladeshi taka, like many other currencies in the world, began losing value.
In interbank transactions, the value of the taka slipped by 3.18 percent against the dollar since April 2020.
Syed Mahbubur Rahman, the managing director of Mutual Trust Bank, said the price of the dollar is unlikely to become stable soon. “We’re sweating over this. It is time we utilised all tools to increase remittance. The impact will be greater if this is not done soon.”
Mohammed Shams-Ul Islam, managing director of state-owned Agrani Bank, saidimports rose threefold, oil in particular, but exports and remittances did not increase at that rate. “We are often buying dollars at higher prices to meet the government’s demands and counting losses.”
Bangladesh imported goods worth $61.52 billion in the first nine months of this fiscal. The import expenditure rose by 43.86 percent from the same period in2020-21 financial year, when the country brought in products of $42.76 billion from abroad.
In comparison to this, exports rose by 32.92 percent while remittances dropped by 17.74 percent.
As a result, the demand for dollars increased so high that several banks hiked dollar prices to around Tk 92-94 although the central bank fixed the rate at Tk 87.5.
According to information published by the central bank, state owner Sonali Bank and Janata Bank bought each dollar at Tk 90 and is selling it at Tk 92.
Among the private banks, Trust Bank is selling dollars at the highest rate, Tk 93.5, after purchasing at Tk 92.8. Mutual Trust Bank is selling dollars at Tk 92.75. And the price has been set at Tk 92.7 at Midland Bank who bought at Tk 91.7.
The Dhaka branch of State Bank of India bought each dollar at Tk 92 and sold them at TK 93.
Expatriate workers and tourists are the chief sources of carb market dollars. They sell off the dollar they have on them to money exchanges, which in turn sell off the cash to overseas travellers who need it.
Md Golam Faruk Apu, who has been working in Margina Money Changer at Gulshan-1 for around 21 years, said he had never seen such a spike in the price of dollars in his career.
“In the past, the price of the dollar rose by a maximum of Tk 0.15 to Tk 0.2 at one time. Now it is rising by Tk 0.5, multiple times in one day.”
“Despite the rise in prices, people are not cutting down on the purchase of dollars. Rates on May 10 were Tk 92.2. It is being sold at Tk 97 today after we bought them at Tk 0.1 or Tk 0.2 less.
Meanwhile, the dollar is being exchanged at different rates in the carb market.
A salesman at Western Union Money Exchange, Md Amin Bhuiyan, said, “We sold [dollar] at Tk 93.6 on [May 12] after buying at Tk 93.3. Today we’re selling at Tk 96.5. The supply of dollars in the market is on, but the price is a bit high.”
The higher dollar expenditure for imports and other necessities is putting pressure on the foreign exchange reserves. Bangladesh had a record $48.02 billion in August last year, but a steady decline has brought it down to $41 billion.