Pressure on the dollar market: Bangladesh Bank sells another $100 million from reserves

Bangladesh Bank has sold another 100 million US dollars from the foreign exchange reserves to keep the currency market stable. The dollars were sold to commercial banks through an auction on Wednesday (November 4).

Earlier, after a long break, the central bank had sold 122 million dollars last week.

Those concerned said pressure has built up in the foreign currency market as import costs, including for fuel, have risen. Dollars are being sold from the reserves to increase supply and keep the market stable in this situation.

In Wednesday's auction, each bank was asked to apply to buy a minimum of 500,000 dollars through a single bid. Bangladesh Bank had also called an auction to sell 100 million dollars on Tuesday. Many banks took part, but the auction was cancelled at the last moment. The banks were not told why the auction was cancelled.

Until the fall of the Awami League government in August 2024, Bangladesh Bank sold large amounts of dollars from the reserves for three consecutive years. As a result, reserves that stood at more than 48 billion dollars in August 2021 fell to 25.92 billion dollars.

Later, after taking over as governor, Dr Ahsan H Mansur adopted a policy of not selling dollars from the reserves. The next governor maintained the same position. Reserves then kept rising and crossed the 37 billion dollar mark on June 29. On September 1, reserves stood at 37.41 billion dollars. Since then they have fallen, reaching 36.43 billion dollars last Tuesday.

Meanwhile, after remaining stable for a long time, the price of the dollar has been rising in the interbank foreign currency market over the past few days. This week the rate per dollar has crossed 124 taka. For the last two days each dollar sold at 124 taka 35 paisa in the interbank market. In the two days before that, the rate was 124 taka 30 paisa.

At the start of last October, the dollar rate in the interbank market was 123 taka. It rose steadily to reach 123 taka 99 paisa on the last working day of the month. After the fall of the Awami League government, the interbank dollar rate stayed within 121 to 122 taka 30 paisa for about a year and a half. It has been rising since March this year and has now reached 124 taka 35 paisa.