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The price of the US dollar has fallen by up to Tk 1 within a week due to an increase in remittance inflow. On Thursday, several commercial banks bought dollars at Tk 122.70. A week earlier, the remittance dollar rate was between Tk 123.60 and Tk 123.70.
The rise in remittance inflows has also reduced the cost of settling letters of credit (LCs) for importers, giving further momentum to trade.
With an adequate supply of dollars in the market, the cost of LC settlements could decline further next week, which is expected to provide an additional boost to business and trade, according to concerned persons.
According to Bangladesh Bank sources, the main reason behind the fall in the dollar price is that commercial banks’ net open positions (NOP) are remaining close to their prescribed maximum limits over the long term. In simple terms, banks currently have an adequate supply of dollars.
As a result, banks are not interested in purchasing remittances at higher rates. At the same time, to sell the dollars they already hold quickly, banks are offering business groups the opportunity to settle LCs at comparatively lower rates.
Meanwhile, the country’s foreign exchange reserves have also shown a positive trend. According to the latest data released by Bangladesh Bank, the country’s gross reserves rose to $37.066 billion last Wednesday. Under the International Monetary Fund’s BPM6 accounting method, reserves stood at $32.260 billion.
