Dollar's interbank exchange rate hits record high

The interbank exchange rate for the US greenback has increased to Tk 108.75, the highest ever in the country's history.

Banks traded a dollar between Tk 108.50 and Tk 108.75 on May 22, down 24.28 per cent from a year ago, data from the Bangladesh Bank showed.

The interbank exchange rate increased almost every working day this month. The rate was Tk 106.80 for a dollar in the interbank platform on May 1.

The local currency has been facing depreciation for the last one year due to the higher import payments and slower-than-expected export earnings and remittance inflow.

In the first nine months of 2022-23, import bills dropped 12.33 per cent year-on-year to $53.93 billion. As a result, the trade deficit, which occurs when a country's imports exceed its exports, declined 41.6 per cent year-on-year to $14.61 billion in July-March.

In April, remittance declined 16.27 per cent year-on-year to $1.68 billion. Overall, money transferred by migrant workers and non-resident Bangladeshis living abroad grew 2.36 per cent to $17.71 billion in July-April.

Export earnings dipped 16 per cent year-on-year in April, with overall receipts growing by 5.38 per cent to $45.67 billion in the 10-month period.

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said the depreciating trend of the interbank exchange rate is a good thing.

The foreign exchange market should be allowed to determine the exchange rate based on the demand-supply method of the greenback, he said.

If the exchange rate for the dollar is kept strong artificially, it will not bring any good for the economy, said Mansur, also a former official of the International Monetary Fund.