BB buys $313m more at higher rate in fresh auction

Despite a recent decline in the US dollar’s value due to increased inflows into the market, Bangladesh Bank has purchased $313 million through an auction on Tuesday, July 15, at a rate of Tk 121.50 per dollar, significantly higher than the current interbank market price.

This marks the second such auction in three days, following a similar purchase of $171 million on Sunday, July 13, at the same rate. 

In total, $484 million has now been bought by the central bank in two rounds – an unusual move that signals a shift in foreign exchange policy aimed at stabilising the market.

The taka had gained strength in recent days, with the dollar falling for four consecutive days in the interbank market – only to rebound by Tk 1.40 on Tuesday. 

The highest rate reached Tk 121.50, while the lowest was Tk 120.80, giving an average of Tk 121.11 – a sharp rise from Monday’s average of Tk 119.71.

According to Arif Hossain Khan, spokesperson for Bangladesh Bank, the recent fall in the dollar’s value is due to increased supply from higher remittance inflows, improved export earnings, and reduced import payments.

“The decision to buy dollars through auctions was taken to stabilise the market and protect the interests of exporters and expatriates,” he said. “If necessary, we will continue to intervene in the future to ensure stability.”

This marks a reversal from earlier strategies, where the central bank sold off reserves to manage dollar shortages. Over the past three fiscal years, around $34 billion has been drawn from reserves to address liquidity issues.

Now, with falling imports, slower LC openings, and rising remittances, the market is seeing a surplus of dollars – leading many banks to prefer selling over holding foreign currency.

Economists and bankers have described the move as a strategic intervention to prevent excessive volatility. While the government’s decision to buy dollars at a premium may seem counterintuitive, it could help curb speculative trading and restore confidence in the taka.

Analysts also highlighted the link between dollar prices and inflation. A weaker taka raises import costs and fuels inflation, while a sudden plunge in dollar value disrupts market dynamics.

Tuesday’s increase in the dollar rate – driven by the central bank’s purchases – is seen as a calculated effort to maintain equilibrium.

With more than $484 million injected into the system via auctions, Bangladesh Bank appears ready to take active measures to ensure the currency remains stable amid shifting economic conditions.