Bangladesh Taka (BDT) appreciated by more than 2.50 per cent against the US dollar in the just-concluded calendar year 2013, thanks to a higher growth in exports despite the domestic adversities.
The US dollar was quoted at Tk 77.75-Tk 77.77 in the interbank foreign exchange (forex) market on December 30, the last working day of 2013 against Tk 79.75 on January 1, 2013.
The US dollar’s weighted average came down to Tk 77.7512 in the forex market on December 30 last from Tk 79.7500 on January 1, 2013, according to the central bank statistics, reports the Financial Express (FE).
“The local currency appreciated against the greenback in 2013 due mainly to the higher growth in exports and the less demand for the US dollars for settling import payments,” a senior official of the Bangladesh Bank (BB) told the FE Sunday.
The BDT started regaining its strength, mainly because of the higher flow of the foreign currency into the market. The flow started going up in February, 2012, market operators said.
“The upward trend continued throughout the last calendar year, but the BDT/USD rate was stable at 77.75 due to active participation in the market by the central bank,” a senior treasury official of a leading private bank told the FE.
He also said the BDT stability against the US currency might not continue in the current calendar year because of a downward trend of inward remittance.
The flow of inward remittance fell by 2.39 per cent to $ 13.84 billion in 2013 from $ 14.18 billion a year ago due mainly to the lower manpower export coupled with the ongoing political turmoil.
In 2012 the local currency appreciated by 2.57 per cent against the greenback due mainly to lower import payments and higher growth in inward remittance.
“Strong exports, sluggish imports and moderately growing remittance backed by the BB’s monetary policy stance to reduce the balance of payment pressure helped strengthen the BDT against the US dollar,” the Citibank N.A. said in its annual market update 2013.
Because of the higher nominal appreciation and higher domestic inflation relative to that of the country’s trading partners, the appreciation of the real effective exchange rate would be even higher, implying some loss in export competitiveness, the update added.
The central bank continued to purchase the US dollar from the commercial banks directly aiming to keep the inter-bank forex market stable by offsetting its increased supply in the market.
As part of the move, the central bank bought US$ 2.35 billion from the commercial banks so far in the current fiscal year (FY) 2013-14, according to the BB official.
The country’s forex reserve reached $ 18.145 billion Thursday from $ 18.096 billion of the previous day, following the US dollar purchase.
“The forex reserve may fall slightly this week after making of a regular payment to the Asian Clearing Union (ACU) for the November-December period of the last calendar year,” another BB official said.
The country was set to remit $ 760 million to the ACU against imports made during the period under review, the central banker added.
Total exports from Bangladesh, the second-biggest clothing manufacturer in the world after China, grew by 18.02 per cent to a record $ 11.96 billion during the July-November period of the FY 14 despite the ongoing political turmoil, labour unrest and factory safety concerns.
The government has set an export target of $ 30.50 billion for the FY 14, which began on July 1 last.
“The export earnings may be affected in the coming months, if the ongoing political turmoil continues,” the private banker noted.
On the other hand, the country’s overall imports grew by more than 9.0 per cent in the first five months of the FY 14 amid the ongoing political turmoil.
The actual imports in terms of settlement of letters of credit (LCs) increased by 9.01 per cent to $ 14.55 billion during the July-November period of the FY 14 from $ 13.34 billion in the corresponding period of the previous fiscal, the BB data showed.