According to data from the Bangladesh Bank, as of March 11, banks’ net open position (NOP) in foreign exchange, representing the variance between their foreign currency assets and liabilities, amounted to $606 million.
This figure contrasted with a negative $40 million on January 1, subsequently rising to $125 million by February 1 and further to $412 million by the end of February.
Experts attribute this rise in NOP to an increase in the influx of US dollars, indicating a growing stability in the foreign exchange market.
Mirza Elias Uddin Ahmed, Managing Director of Jamuna Bank, highlighted factors such as a surge in remittances over the past two months, expanding exports, and initiatives by the central bank as contributors to the increased inflow of foreign exchange into banks.
Remittance inflow experienced a year-on-year increase of 39 percent in February, reaching $2.16 billion, the highest in eight months, following an 8 percent rise to $2.10 billion in January.
Exports totaled $10.91 billion in January and February, marking the highest figures for the two months.
The central bank’s introduction of a currency swap deal in February allowed commercial banks to exchange local currency for US dollars for periods ranging from seven to 90 days, leading to a boost in both US dollar and local currency inflows, alongside the growth of foreign currency reserves.
As a result of the central bank’s incentives, individuals holding US dollars in cash are now encouraged to deposit them in banks, with increased interest rates and benefits offered on resident foreign currency deposits (RFCD) accounts.
The curb market exchange rate of the US dollar against the taka also experienced a decline due to substantial US dollar inflows, with several foreign exchange dealers selling each US dollar at Tk 120 and buying at Tk 118 to Tk 119, a decrease of Tk 4 to Tk 5 from the previous week.
Furthermore, reduced import payments contributed to the decline in the exchange rate, with import payments during the July-January period of this fiscal year amounting to $36.02 billion, down from $44.02 billion in the same period of the previous fiscal year.
Overall, the local currency market is experiencing increased liquidity as the foreign exchange market stabilizes, leading banks to seek liquidity support from the central bank under the currency swap deal.
The overnight average call money rate, indicative of short-term funds lending and borrowing among banks, stood at 8.58 percent on March 14, down from 9.30 percent a month ago, reflecting an improvement in the stability of the money market.
