Local Market

During last week (October 04-October 08), local forex market was high and stable. The week started with a high demand for US dollar, but later in the week the dollar demand eased a bit. During the first three days, the exchange rate for dollar crossed the Bangladesh Bank's selling rate of BDT 47.25. The main reason was again payment liability for import LCs which were opened in the first half of the previous month. Higher remittance during the last half of the week reduced some pressure on BDT and dollar exchange rate came down within the range of Bangladesh Bank's prescribed rate. However, the exchange rate of dollar ranged between BDT 47.23 and BDT 47.2550 over the last week.

The effect of the devastating flood is still weighing heavy on the kerb market. The dollar demand continued to be low in the informal market due to reduce business activity. During the week, the exchange rate for cash US dollar ranged between BDT 47.70 and BDT 48.00.

On October 4, Bangladesh Bank accepted the following Treasnrv hills

Payment against Tk 4.415 million T-bills was made on Monday last. T-bills worth BDT 5.115 million matured on the same day. Even though the amount of T-bills matured was greater than that of the payment, call money rate went up and ranged between 8.50 per cent and 9.00 per cent before the first clearing house due to prevailing uncertainty.

The government's decision to accept T-bills in tenors of multiple of seven days has started yielding fruits. Payment and maturity dates being the same, money market was not that panicky this week as it was before. From now on, payment and maturity will occur on the same day thus minimising the gap and reducing money market volatility. However, there still remains some mismatch due to the maturity of the already accepted 1-year bills. But once those T-bills mature, there will be no mismatch between payment and maturity.

International Market

International forex market went berserk on Thursday. US dollar declined dramatically against all the major currencies without any fundamental reason. Prospect of further rate cut by Federal Reserve. Japanese prime minister's pledge to inject another 10 trillion yen in Japanese economy, and prospect of concerted rate cut by major European economies mainly drove international forex market last week. — StanChart Bank

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