Over 90 percent of the corporate deals (for imports) worth over $150 million were settled at Tk 72.80 against the dollar in yesterday's market, according to fund managers at different banks. The rate was as high as Tk 73.05 against the dollar in a foreign bank. But the inter-bank rate was Tk 71.15 against the dollar.
The dollar has appreciated against the taka by over 4 percent in the past two months although the greenback is losing to other major global currencies.
Bankers attributed the price hike of the dollar to higher imports and its costs and sliding remittances.
“The gap between demand and supply of the dollar is growing faster. Its (dollar) price may increase further if the supply side is not improved,” said a fund manager of a private commercial bank.
The country's supply side depends on exports and inward remittances, while demand is driven by imports and outward remittances.
Bangladesh received around $10 billion from exports and another $5 billion from inward remittances during the first half (July-Dec) of the current fiscal year. The country spent nearly $13.2 billion for imports alone during the period, creating a pressure on the balance of payments. Import growth was 36.5 percent compared to the same period last year.
According to Bangladesh Bank data, balance of payments stood at negative $584 million during the July-November period of the current fiscal year, but it was positive at $2.15 billion during the same period a year ago. Foreign exchange reserve has also dipped down to $10.39 billion on January 25 from $11.17 billion on December 30, 2010.
Bangladesh has been witnessing volatility in foreign exchange market after it had faced a crunch in the money market in December and January. The call money rate rose as high as 190 percent recently, but has come down to 5-6 percent now.
Bankers said higher import payments are pushing up the demand for the greenback. The import prices of fuel oil, edible oil, wheat, rice and cotton have increased significantly. Per tonne of edible oil was sold at $480 a year ago, but the price is now at $1,000. Similarly, fuel oil price has gone up to $98 from $60 a barrel last year.
In the past six months, soybean prices rose 46 percent to more than $14 a bushel. Sugar, while lower than in November, is still up 34 percent over six months ago to around 31 cents a pound. Cotton price almost trebled in one year.
The rising import payments for power plant equipment and capital machinery are also making the greenback costlier in the market, according to the bankers. The situation is fuelling the inflationary pressure (nearly 8 percent on point-to-point basis), they added.
“An urgent move is needed to boost exports and inflow of remittances. Otherwise the demand and price of the dollar will soar further,” said a senior official of a foreign commercial bank that is strongly exposed to international trade.
Another fund manager of a private bank said the central bank could cool down the market by selling dollars to the banks instead of lending.
While the overall situation of the foreign exchange market is hurting the importers, it gives more money to the exporters and remittance recipients.
An exporter of $10 million now gets Tk 2 crore more (1 dollar = Tk 72 instead of Tk 70) and a recipient of $1,000 remittances receives Tk 2,000 more than he/she used to get two months ago.
source:thedailystar.net
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