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Liquidity in foreign exchange market increased Thursday afternoon following the central bank disclosure to start vigorous investigation.
Earlier Bangladesh Bank declared that it would start intensified probe into foreign companies' profit repatriation and arrival of merchandise as per letters of credit (LCs)
As Bangladesh Bank declared its intention to start intensified investigation into foreign companies' profit repatriation and arrival of merchandises as per Letter of Credit documents, liquidity in foreign exchange market increased Thursday, BB sources said.
Bangladesh Bank officials believe dollar would settle at Tk 70 to Tk 71 shortly and that "prospect of Taka gaining against the American currency is bright."
Although Bangladesh Bank paid Wednesday Asian Clearance Union (ACU) US $ 300 million, the central bank officials do not apprehend any further rise in dollar price. The current foreign exchange reserve stood at US$ 2.7 billion after the ACU payments.
"I have observed that liquidity of dollar increased in the foreign exchange market in the afternoon, (Thursday)," said a senior Bangladesh Bank official.
The BB decision to investigate thoroughly the audited documents of the foreign companies came at a meeting with the Association of the Bankers' Bangladesh (ABB) at the central bank's premises.
Bangladesh Bank governor Salehuddin Ahmed asked the foreign exchange dealers what went wrong with the market that watched subsequent appreciation in dollar in a short span of time though exports and remittances surpassed import bills and debt payments.
Pubali Bank managing director Khondkar Ibrahim Khaled told the governor that the central bank might intensify its monitoring on the movement of foreign currencies and goods supposed to be imported, rather than intervening the market, meeting sources said.
Khaled told the Bangladesh Bank governor that transfer of profits by foreign companies could be scrutinised carefully and that the customs department might check if goods were imported as per their proper values.
According to BB statistics, exports receipts and remittances together amounted to US$ 7.5 billion during July-January of the current financial year as against imports worth US$ 6.7 billion.
"We are enjoying a current account surplus…it is good for the economy in the short term since we have a negative balance in our capital account," said the senior BB official.
ABB president M. Aminuzzaman said some small banks might have been opening LCs without taking a pragmatic view of foreign currency reserve situation, leading to appreciation of US dollars rate in the market.
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