Bangladesh Bank caps difference between dollar buying and selling rates at Tk 1

Bangladesh Bank took the decision in a meeting with foreign exchange dealers and bankers amid a lingering crisis over the supply of the dollar

Published : 14 August 2022, 12:57 PM
Updated : 14 August 2022, 07:30 PM

The gap between the buying and selling rates of the dollar against the Bangladesh currency will be a maximum of Tk 1, according to two officials of the central bank.

The development came as the dollar-taka exchange rate set a new record in the so-called kerb market.

Bangladesh Bank took the decision in a meeting with foreign exchange dealers and bankers on Sunday amid a lingering crisis over the supply of the dollar.

“All banks will follow a ceiling,” said Bangladesh Bank spokesman Serajul Islam.

The central bank will monitor the trading of the foreign currency in an effort to ensure the dollar supply.

Bangladesh Bank increased surveillance over the open market along with the banks in an effort to stay on top of the spiking dollar exchange rate. It has punished errant bankers and merchants, but the crackdown seems to have no effect on the market, at least for now, as the price of the greenback continued to rise in the open market.

The clampdown has stoked fears among unlicenced traders. The dollar shortage put an unofficial limit on the size of transactions by the authorised companies and banks.

Despite the ongoing efforts, the dollar’s price has risen in the span of a few days. In May, it was sold at Tk 102 before falling to Tk 98-99 and settling for some time.

But show-cause notices to dozens of money exchange companies and cases against at least 11 others stirred up the open market.

The Bangladesh Bank also ordered the removal of chiefs of treasury departments of five local and one foreign bank for “making extra profit in treasury operations”.

Md Mosharraf Hossain, managing director of Meximco Money Exchange in Dhaka’s Paltan, said since the beginning of Bangladesh Bank’s crackdown on the currency exchangers for allegedly manipulating the exchange rate, they have been strictly following the protocol for selling US dollars.

“For example, if one out of 10 people comes with their passports to buy dollars, we're only selling it to the person with the passport with endorsement certification and we're refusing to sell to the other nine,” he said.

“We’re in dire shortage of dollars. Whenever we get some, we sell some. The rate at noon today [Sunday] was Tk 115 and in the afternoon it was Tk 114.5.” Last Wednesday, the dollar was sold at Tk 119 in the open market."

Mosharraf, however, indicated that unauthorised foreign exchange dealers have been selling the US dollar at a different rate.

He said tourists coming from abroad are more inclined to sell the US dollars in their possession to these unauthorised dealers as they are offering a higher rate.

Since Thursday, NM Mithun Majumder, from Dhaka’s Chittagong Road, has been looking to buy at least $600 as he, along with a friend, is planning to make a trip to India.

They could not buy a single dollar from banks or authorised dealers as they were told that there is a shortage of dollars.

“We approached a scalper who asked Tk 121 per dollar yesterday [Saturday]. The same man asked for Tk 124 [per dollar] today. We had exhausted all our options already, so we bought $250 from him at that rate,” Mithun said on Sunday.

“Banks won’t sell you dollars unless you know someone there.”

Md Reazaul Karim, the manager of the Chittagong Road Branch of Sonali Bank, told that they are failing to serve customers who have been asking for US dollars due to a supply-demand mismatch.

“The supply [of dollars] is seriously low. The price of dollars in the kerb market is pretty high right now. People who wish to sell dollars are rushing to that market and that’s why the inflow of greenbacks to banks became very low right now,” he said.

Foreign exchange reserves in Bangladesh slipped to $39.67 billion as on Jul 20 from $45.51 billion a year earlier. The government has also announced a series of austerity measures, including curbs on the imports of luxury goods, to preserve dollars.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher