Bangladesh Taka maintained its stable tone against the greenback in last week. The foreign exchange market enjoyed sufficient liquidity because of lower import payments because most of the importers were now very cautious about financial risk. The supply of the greenback increased with inflow of remittance and export income. The foreign exchange reserve stood at its highest ever level at US$ 7.47 billion on June 30, 2009 while it was US$ 6.56 billion in May 2009, showing signs that the reserve would go further high in coming days. Most of the banks were in selling spree creating more liquidity enabling the greenback to appear more established. Some banks had to offload dollar to comply with regulatory requirement about dollar holding. They had been holding on to the same with the hope that demand for dollar would gain against BDT. Bangladesh Bank remained active to achieve price stability and to control inflation by purchasing dollar from the inter-bank market. At the same time, this buying of greenback helps all the commercial banks to comply with the regulation. The central bank purchased USD 42.00 million on June 30, 2009 from the commercial banks to keep the interbank foreign exchange market stable. The average daily inter-bank USD/BDT transaction volume was about USD 24.99 million against USD 23.14 million of the week before. Last week the average volume was 8.00 per cent higher than that of the preceding week.

USD/BDT swap market last week was not active throughout the entire week because of fall in call money rate between the range of 0.10 per cent and 0.15 per cent, and less volume of LC payment in the market. The average volume of swap transaction was around USD 8.50 million last week.

Most of the banks kept their published foreign exchange rates unchanged in this competitive market. The USD/BDT selling rates for importers of major foreign and private banks ended at Tk 69.40/69.55, while USD buying rates from exporters were Tk 68.40/68.55. For non- commercial payments (i.e. telegraphic transfer as donations, wage earners' remittance, dollar drafts etc), the range of average T.T buying rates from customers were between Tk 68.40 and Tk 68.55, while average T.T selling rate was Tk 69.4222 on the last working day.



Local money market

Last week, the local call money rate dropped further due to excess liquidity in the market. Bangladesh Bank also injected some fund by purchasing USD from the market, which made the local fund market more liquid. The call rate hovered between the range of 0.10 per cent and 0.25 per cent. Bangladesh Bank has been vigilant in managing the overall fund position to keep the call money rate within single digit. Money market dealers are expecting the same level in the coming week as well.

Last week, Bangladesh Bank accepted BDT 2.50 billion worth of 91-day govt. treasury bills and BDT 1.50 billion worth of 182-day govt treasury bills against the maturity of BDT 1.50 billion. The shortage of BDT 2.50 billion did not play any role to raise the call money rate. The cut-off yields of 91-day and 182-day treasury bills were respectively 3.04 per cent and 4.25 per cent respectively.