Forex Market Update
Dollar gains again against taka but drops more against majors Our Analyst
The US dollar dropped against other major currencies but continued to gain against the Bangladesh taka last week as Bangladesh Bank allowed the market to decide the rate. The central bank officials say the US dollar should go up further as higher dollar rate will boost country's exports and remittance inflow, the economy needs to maintain its growth. The home currency, however, recovered strengths against the euro and the British pound sterling despite the currencies gained against the greenback.
The US dollar rose to Tk 82.75 last week ending Thursday from Tk 82.75 on Thursday, the previous week and from Tk 81.70, its highest level in 2017. The British pound sterling, however, eased to Tk 111.8545 from Tk 112.3166 while the euro dropped to Tk 98.9377 from Tk 99.5648, dealers of different commercial banks said noting that the demand for US dollar was stronger from importers as a huge amount of import bills remained pending when some commercial banks had shortfall in dollar's inflow.
In unofficial markets, the US dollar traded at Tk 85.50 level as traders were very anxious over the dollar's continued upward trends in interbank market. A large amount of dollar funds are coming from remittance earners through unofficial channels which worries banks. At the last week of 2016, banks rushed to the market and had to buy dollar at higher prices as central bank refrained itself from intervention. Market analysts think, the American currency may add more points against the local currency in the days ahead as the price of US dollar was kept under-valued for a long time to reduce cost of imports. The Bangladesh taka lost grounds significantly to Tk 81. 70 from its low at Tk 78.70 in 2017.
Against major currencies, the US dollar dropped on Friday as investors speculated that the European Central Bank (ECB) policymakers are preparing to reduce their vast monetary stimulus program. The dollar index, which measures the greenback against six major peers, decreased 0.94 percent at 90.989 in late trading. The minutes from the ECB's December meeting showed that the central bank could shift away from its ultra-loose monetary policy efforts this year, according to Market Watch. Analysts said that the latest ECB minutes were a bit on the hawkish side and gave some support to the euro.
On the economic front, the Consumer Price Index for all urban consumers increased 0.1 percent in December on a seasonally adjusted basis, in with market estimates, the US Labor Department reported Friday. In late New York trading, the euro rose to 1.2182 dollars from 1.2038 dollars in the previous session, and the British pound gained to 1.3734 dollars from 1.3534 US dollars in the previous session.
The Australian dollar climbed to 0.7912 dollar from 0.7893 dollar. The US dollar bought 111.05 Japanese yen, lower than 111.11 yen of the previous session. The US dollar fell to 0.9686 Swiss franc from 0.9761 Swiss francs, and it moved down to 1.2486 Canadian dollars from 1.2527 Canadian dollars.