Demand for the dollar has risen as abnormal import costs have risen. The dollar is getting stronger as a result; Money is weak in contrast. In other words, the value of the dollar against the money has risen again. Although the dollar remained stable for a month and a half, it rose again on Sunday. This information has been known from Bangladesh Bank sources.
Till last Thursday, one dollar had to cost 65 rupees 70 paise in the interbank money market; It took 6 rupees there on Sunday. And the banks are selling dollars at four or five rupees more. As a result, the dollar is being sold at 91 rupees or more in the open market.
For more than a year after the coronavirus epidemic, the dollar was trading at 74.70 paise. From August 5, the dollar began to appreciate against the rupee. The price was stable from the last week of November to last Thursday after rising to Rs 75.80. In other words, after about a month and a half, it has started increasing again from today, Sunday. As a result, the Bangladeshi currency has lost 1 taka 20 paise or 1.41 percent against the dollar in the last five months.
The country’s exporters are somewhat relieved by the devaluation of the rupee against the dollar. According to them, among our neighbors, India and Pakistan have devalued their currencies against the dollar. At the time of the Corona epidemic, they continued to devalue the currency, but Bangladesh has not yet devalued it in that way. They say the value of money should be further devalued to encourage exports.
However, importers are worried about the rising exchange rate of the dollar. On the one hand, the cost of shipping in Corona has increased and the cost of transportation has also increased due to the container crisis. Intermediate commodities in raw materials and production have to be imported at increased prices. In addition, the increase in the exchange rate of the dollar is added to the cost of production of goods. As a result, consumers have to buy products at higher prices than before. This is increasing inflation.
The cost of rice, pulses, edible and fuel oils, baby food, spices, wheat, air tickets and medical expenses abroad have already risen due to rising import costs. As a result, people’s purchasing power is declining and inflation is rising. In the current fiscal year (2021-22), the national budget has planned to keep inflation at 5.5 percent. However, at the end of December, the average inflation rate exceeded six percent.
According to economists, there is no reason to worry now that the cost of imports has risen but there are adequate reserves. However, they have suggested devaluing the currency to eliminate the imbalance in the exchange rate.
In this context, the executive director of the Policy Research Institute. Ahsan H Mansoor told Arthasuchak that the value of dollar has risen and now it is Rs. And in the open market it is 91 rupees or more. In this case the difference is much greater. This may disrupt the normal flow of money in the banking system.
Advising to devalue the currency in this situation, he said, the value of Bangladeshi taka should be devalued by 3 to 4 percent against the US dollar. It will get good results.
He added that inflation is somewhat upward. There is anger among the common people about the price of goods. Of course, inflation is higher all over the world now. Oil and rice prices rise in the international market. Its effect will be in Bangladesh for some time. On the other hand, imports are increasing a lot. Compared to that, export earnings and remittances are not increasing. As a result, inconsistencies are being created in the balance of payments.
As a result, the government will have to increase rice imports to control inflation. The government also imported 6 lakh tonnes of rice last year. This year, it is necessary to increase it and import 15-20 lakh tons of rice.
Meanwhile, Bangladesh Bank is selling a lot of dollars to meet the demand of banks. Today, on Sunday, 20 million (20 million) dollars have been sold. Even then the prices are rising. Bangladesh Bank has sold a total of 2.5 billion (2.5 billion) dollars in the current fiscal year 2021-22 till Sunday (July 1, 2021 to Sunday).
The rate at which Bangladesh Bank sells or buys dollars from banks is called the interbank transaction bank rate. Banks also trade dollars from each other at this rate. Banks are selling dollars at four-and-a-half rupees more than this rate to take advantage of the demand. However, as per the guidelines of Bangladesh Bank, this gap should never be more than one to one and a half rupees.
Bank of Bangladesh officials say there is no fear of an unusual rise in prices as there is sufficient supply of dollars in the market. There are enough dollars in reserve. Dollars will be released to the market from there as required.
Earlier, in the last fiscal year 2020-21, Bangladesh Bank bought a record ৮ 6 billion (700 crore) from the market to keep the market stable. Following this, in the first month of the current fiscal year 2021-22, 205 million dollars were bought. Since then, the demand for dollars has been increasing. As a result, Bangladesh Bank is also supplying the required dollars to the market.
Bangladesh Bank pays the import bill of the country through Asian Clearing Union (ACU) for three consecutive months. The import bill for the last quarter of last year (October-December) was paid in the first week of the new year. After the payment of Akur bill on January 5, it stood at 44.36 billion dollars. This has increased the pressure on the dollar. At the start of the day on Sunday, the reserves stood at 44.45 billion. However, on August 24, the reserves crossed the ৮ 46 billion milestone, surpassing all previous records.
According to international standards, a country has to hold foreign exchange reserves to cover three months of import costs. However, with the current reserve, Bangladesh will be able to pay the import bill for six months.
According to the Bangladesh Bank, last November, Bangladesh imported a variety of goods worth 654.7 million (8 7.85 billion). Which is more than any time in the past as a month. In the first five months (July-November) of the current 2021-22 fiscal year, goods worth 33.6 billion were imported. This is 54 percent more than the same period last year.
Six-month data on export earnings and remittances have been released. It shows that in these six months (July-December) the expatriates sent 10.23 billion remittances. Which is 21 percent less than the same period last year.
However, there has been a boom in export trade. In these six months, Bangladesh earned 24.60 billion by exporting various products, which is 26.41 percent more than the same period last year.