FE Report

The central bank purchased over US$ 1.50 billion from the commercial banks in the fiscal ended on June 30 to keep the inter-bank foreign exchange market stable, officials said Monday.

"We've bought the US currency from the banks directly to help them comply with the net open position (NOP) rules on holding foreign exchange," a senior official of the Bangladesh Bank (BB) told the FE.

As part of the move, the central bank of Bangladesh purchased $37 million from four commercial banks Monday on the same ground, the BB official confirmed.

He also said the central bank has continued its intervention in the inter-bank foreign exchange market through selling and buying of the US currency directly besides providing overdraft facilities to the banks for keeping the overall market stable.

A total of $1.511 billion was bought in fiscal 2008-2009 (FY) against only $202.50 million of the previous fiscal which has pushed the foreign exchange reserve up, the BB official added.

Market players, however, welcomed the BB's move saying that such intervention is needed to keep the market stable.

"Such measure will benefit both exporters and migrant workers who send home billions of US dollars each year," a senior treasury official of a commercial bank told the FE.

The country's foreign exchange reserve stood at an all time high at $7.466 billion on the day, thanks to a robust growth of inward remittances as well as decreasing import payments.