Bangladesh Bank intensifies intervention as dollar hits new high
The central bank has intensified its efforts to keep the exchange rate of the local currency stable in the face of rising demand for US dollars. Bangladesh Bank has sold about $1.38 billion worth of US dollars so far this fiscal year to protect the taka from any volatility and meet the demand of the economy. The sales were nil during the same period a year ago. Rather, the BB bought the American greenback last fiscal year.The average interbank exchange rate was Tk 85.65 per USD on October 19, up from Tk 84.80 a year ago, BB data showed. Four private commercial banks were selling USD at Tk 88 to Tk 89 yesterday, according to their website. A money exchange operator said he sold USD at Tk 90.30 yesterday. “The price has gone past Tk 90 in the last three days.”The LC opening of petroleum products surged 62 per cent, BB data showed. In an encouraging development, exports grew at 38 per cent in September. Remittance, which provided a much-needed cushion to the economy battered by the pandemic, however, fell 20 per cent in September.In June, a tender was floated to buy 3.95 lakh tabs for the digital census, but the contract is yet to be awarded as the tender process has not been completed.
Tax receipts treble in 3yrs
The surge in sales of state-backed savings instruments has become a major source of income for the revenue collector in recent years as it charges up to 10 per cent tax on the profits made mainly by pensioners and middle-class families. The Department of National Savings (DNS) said it deducted Tk 2,907 crore as the source tax on interest income of investors of pensioner savings certificates, family savings certificates and Bangladesh savings certificates.The source tax deducted in the last fiscal year was 49 per cent higher from Tk 1,946 crore from the previous year. It was Tk 638 crore in the fiscal year 2016-17.Savings instruments yield more than 11 per cent interest, whereas the weighted average interest rate on bank deposits was 4.05 per cent in August, according to the Bangladesh Bank and the DNS.Sales of savings certificates surged 67 per cent year-on-year to Tk 112,188 crore in 2020-21.The individual would have paid only Tk 5,000 in tax had the NBR allowed the adjustment. In the absence of such a provision, the tax amount doubles to Tk 10,000.
Deep cuts in corporate tax for specific products
Government’s revenue authority slashed corporate tax sharply for local manufacturers of a number of products for a longer term until June 30, 2032, as a measure for manufacturing sector to flourish. Manufacturers of refrigerators, complete freezers with spare parts, motorcycles, air-conditioners and their compressors will enjoy 10-per cent concessionary tax rate on their incomes for the period after the date of commencing commercial production, according to the National Board of Revenue (NBR) notification. Income-tax wing under the Internal Resources Division (IRD) issued a Statutory Regulatory Order (SRO) on October 21, 2021 to give effect to the cut-down corporate-tax rate. Currently, the manufacturers of those products are required to pay corporate tax at regular rates, like other companies, ranging from 22.5 to 30 per cent on the basis of categories of companies.The existing manufacturing industry that has reconstructed businesses or classified as new businesses or industry formed through transfer of machinery or building structure would not be entitled for the reduced rate of tax. However, industries that have been enjoying 5.0-per cent tax rate under an SRO issued in 2009 would continue to avail the facility until its tenure ends. After expiry of their tenure under the SRO, those industries would have to pay 10-per cent tax until June 30, 2032.
Banking, insurance, telecom sectors surge most
Stocks ended almost flat on Wednesday, after a sharp rise in the previous day, as investors adopted ‘wait-and-see’ strategy. Following the previous day’s strong comeback, the market started higher and the key index soared 60 points within the first hour of trading, but failed to sustain that level amid selling pressure on selective large-cap stocks. Finally, DSEX, the key index of Dhaka Stock Exchange (DSE), went up 6.10 points or 0.08 per cent to close at 7,011, after recovering more than 120 points in the previous day. However, the DS30 index, comprising blue chips, fell sharply by 17.32 points to finish at 2,644 as its heavyweight British American Tobacco suffered most, contributing about 27 points fall of DSEX. Turnover, another important indicator of the market, stood at Tk 14.97 billion on the prime bourse, which was 8.0 per cent higher than the previous day’s tally of Tk 13.86 billion.Although BATBC has posted a 32.56 per cent profit growth in nine months for January-September 2021, and recommended 125 per cent interim cash dividend, its share price plunged by 3.63 per cent. The tobacco manufacturer’s earnings per share (EPS) stood at Tk 21.41 for January-September 2021 as against Tk 16.15 for January-September 2020.Gainers took a modest lead over the losers as out of 375 issues traded, 180 closed higher, 166 ended lower and 29 issues remained unchanged on the DSE trading floor. A total number of 218,918 trades were executed in the day’s trading session with a trading volume of 364.26 million securities. The market-cap of DSE, however, dropped to Tk 5,633 billion, from Tk 5,639 billion in the previous day.The port city bourse CSE also edged slightly higher with the CSE All Share Price Index – CASPI – gaining 9.01 points to settle at 20,453 and Selective Categories Index – CSCX – advancing 2.0 points to finish at 12,285.