Central Bank Purchases $171M in Inaugural Auction

For the first time, Bangladesh Bank (BB) purchased US$171 million on Sunday from commercial banks through an auction. The central bank's latest move came in the wake of a falling trend in the exchange rate of the US currency against the Bangladesh Taka (BDT) for more than a week following a higher inflow of remittances along with export earnings. The central bank set a cut-off rate of Taka 121.50 for these dollar purchases, a rate higher than the approximately Tk120 offered by most banks.

A senior official of the central bank said BB has intervened in the market by purchasing US dollars from commercial banks through an auction aiming to keep the exchange rate of the BDT against the greenback stable. He also said the central bank will sell the US dollar to banks through a similar auction if the exchange rate of the greenback increases against the local currency. "We may consider intervening in the market whenever necessary to ensure the exchange rate of the US dollar against the local currency remains stable," he added.

The exchange rate of the US currency is expected to rise to Taka 121.50 per unit today, up from Taka 120 on Sunday, according to a senior treasury official at a leading private commercial bank (PCB). On Sunday, most banks quoted the exchange rate of the US currency at around Taka 120 per unit. It was more than Taka 123 more than a week before.