BB makes Tk26,300cr profit from taka devaluation in FY22

The Bangladesh Bank has made a profit of nearly Tk26,300 crore from foreign currency revaluation in the last fiscal year.

The huge exchange gains came in the form of a faster devaluation of the taka, which pushed its total profit up to Tk29,247 crore in FY22 – more than five times higher than the Tk5,777 crore in FY21, according to the Bangladesh‍‍`s Bank annual report for the last fiscal year.

The central bank built up the country‍‍`s foreign exchange reserve by buying dollars from banks at a rate of Tk78-Tk84 previously, which was sold at Tk87 to banks in the last fiscal year amid a dollar scarcity, causing huge exchange gains for the authorities.

The gain from foreign currency revaluation was only Tk2,605 crore in FY21, central bank data show.

Although the profit from taka devaluation came at the cost of the entire country‍‍`s sufferings, the earning has no use as the exchange gain is not distributable profit and the Bangladesh Bank keeps the earnings in its permanent account.

The earnings were retained in the permanent account because the central bank made a super profit last year, but it may incur a loss in future, according to a senior executive of the Bangladesh Bank.

As a result, the central bank distributes only the profit from other income sources, such as interests, commission, etc.

The Bangladesh Bank decided to deposit Tk2,867 crore of its profit into the government‍‍`s exchequer, which is 45.65% higher than the Tk1,962 crore projected in the revised budget for the last fiscal year, according to the annual report placed at the board meeting of the central bank held this week.

The central bank spent $7.62 billion from the foreign exchange reserves in FY22 to slow down the weakening taka against the dollar, while it bought $7.7 billion the previous fiscal year, according to the latest monetary policy statement announced this week.

The Federal Reserve Bank‍‍`s tightening move to boost the dollar forced the Bangladesh Bank to reverse buying the greenback.

The dollar-selling spree eroded foreign exchange reserves to $41.9 billion as of 28 June this year compared to $46.4 billion at the end of June 2021.

The Bangladesh Bank intervened in the foreign exchange market throughout the last fiscal year, causing the highest depreciation of the taka against the dollar among its Asian peers.

Bangladesh experienced 9.2% currency depreciation against the dollar during the last fiscal year when the Malaysian currency lost value by 5.6%, India‍‍`s by 4.8%, China‍‍`s 3.5%, and Indonesia‍‍`s by 2%, according to the Bangladesh Bank data.

On the other hand, the currencies of Cambodia and Vietnam enjoyed appreciation against the dollar during the same period.

The exchange rate of the dollar, which was Tk84.81 at the end of June last year, surged to Tk93.45 at the end of this June, according to the Bangladesh Bank data.