The Bangladesh Bank’s dollar buying spree slowed down in the first five months of 2021 since the country’s major export destinations were going through massive vaccination drives, prompting exporters to rebuild a moderate industrial input to resume full-fledged supply.

The central bank purchased around $1 billion from the interbank dollar market from January till May 25, taking its total dollar purchase to around $6.5 billion in the current fiscal year 2020-2021.

A BB official said that the central bank usually bought and sold dollar from the local market with a view to keeping the exchange rate of the most influential currency stable.

Buying and selling of the currency depends on the supply situation on the local market, the official said.

For more than a year, the BB has kept the exchange rate of dollar at around Tk 84.8 in an attempt to save the exporters from any sort of exchange rate shock, he said.

The BB purchased $5.49 billion and injected $200 million into the local market in JulyDecember of FY21 when the country’s import payment was slack.

However, the situation started to turn around after successful trials of Covid vaccines in the second half of the year 2020.

According to the latest available data, even though the country’s export earnings in the first nine months of FY21 has remained almost flat as it was in the same period of the previous fiscal year, import payments started to gradually improve which was a reflection of the fact that businesses had started to rebuild their industrial inputs.

The vaccination drives in the country’s major export destinations acted as a major reason behind the rebound in business sentiment.

Media reports showed that the three major export destinations of Bangladesh — the United States, Germany and the United Kingdom — had vaccinated a significant percentage of their populations.

In the US, more than 50 per cent of the country’s population had received at least the first dose of Covid vaccines with 40 per cent completing both doses.

Besides, the UK and Germany had also vaccinated 57 per cent and 42 per cent of their people respectively with at least the first dose.

The BB officials said that they had observed a growing trend in import payments in the last several months.

Import payments increased by 6.04 per cent to $42.77 billion in JulyMarch of FY21 against $40.33 billion in the same period of FY20.

Import payments in January, February and March stood at $6.69 billion, $5.15 billion and $5.7 billion respectively against the average import payment worth $4.2 billion in the first half of FY21.

Another provisional data of the central bank showed that the letter of credit settlement year increased by 76 per cent yearon-year in April.

A separate data showed that against the net purchase of $5.29 billion from the local market in the current fiscal year so far, the central bank had injected around Tk 45,000 crore into the money market.

As a result of the surge in currency supply on the money market, the banks were suffering from excess liquidity burden.

Moreover, a surge in excess liquidity also resulted in a deposit rate plunge in the country’s banking sector.

In FY20, the BB purchased $877 million against $862 million sales.

In FY19, the BB sold $2.34 billion to the local market and made no dollar purchases from the local market.