Bangladesh Bank (BB) decided to devalue the taka against the US dollar to balance out increasing import payments and give reassurance to remitters.
BB set the interbank exchange rate to hit Tk 86 per dollar, up from Tk 85.80 on Thursday.
This has been the most vital depreciation of the local currency in recent years. As BB usually depreciates the local currency between Tk 0.05 and Tk 0.10 per dollar for a specific working day.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said to the media that this was the right decision towards adjusting the imbalance faced by the foreign exchange market.
H Mansur urged the central bank to depreciate the local currency to at least Tk 88 per dollar.
“I hope this is the first step in the BB’s efforts to depreciate the local currency, and the central bank will do it step by step to keep the market stable.”
A central bank official said to the media the exchange rate was supposed to be determined by the market. But the BB intervenes in the foreign exchange market from time to time in the interest of the economy.
Taka has been facing a burden recently as the import payment and dwindling remittance inflow.
Against the setting, the BB boosted dollars into the market on a steady basis in order to hold the depreciation of the taka.
For example, banks have so far purchased around $2.50 billion from BB this fiscal year to settle their import bills. As a result, foreign exchange reserves are deteriorating.
Import payments hoisted at $31.16 billion between July and November, up 54 percent year-on-year.
Remittances lessened 21 percent year-on-year to $10.23 billion in the first July to December of the fiscal year 2021-22.