The Bangladesh taka (BDT) lost around 50 paisa against the US dollar on Monday as the exchange-rate reversal that had been seen the day before was offset by regulatory support for the falling greenback.

According to the central bank’s most recent data, the reference rate for the US dollar and BDT rose to Tk 121.1375 per dollar at 5:00 PM that day, from Tk 120.6708 at the same time the previous day.
Regarding the state of the market, a senior official from Bangladesh Bank (BB) told The Financial Express (FE) that “the central bank’s market involvement was the main reason the local currency depreciated by about 50 paisa.”

Market participants, however, are urging the central bank to take timely action in the foreign-exchange market to prevent potential market instability.

“The local currency could appreciate against the US dollar if the central bank does not intervene promptly in the market,” a senior treasury official at a prominent private commercial bank (PCB) stated to The Financial Express in response to an inquiry.

He also cautioned that remittance inflows might shift to informal channels if the US dollar depreciates against the BDT. “Export earnings could decline for the same reasons.”

The Spot Reference Exchange Rate in the Bangladesh Foreign Exchange Market is a transaction-based weighted average rate that includes forex spot transactions of $100,000 or more within the market.

The central bank determines the daily reference rate by taking into account the weighted average rate of the US dollar and BDT from four types of transactions conducted by all 61 authorised dealer (AD) banks in Bangladesh.

These forex transactions encompass export-proceeds encashment, commercial remittance, transaction details with exchange houses or aggregators for inward remittance, spot foreign-currency (FC) sales covering all deals including letters of credit (LC), service payments, debt service, outbound remittance, and inter-bank forex transactions.

On Sunday, the central bank made its first intervention in the market by purchasing US$171 million from 18 banks through an auction.

During the auction, the central bank accepted bids at a maximum cut-off rate of Tk 121.50 per dollar, as stated by another BB official, who also mentioned that participating banks are permitted to quote a single rate for such auctions.