A unified foreign exchange rate came into effect on Sunday as per the guidelines of the International Monetary Fund (IMF) as the Bangladesh Bank moved away from a floating exchange rate after a long period.
From now on, price of US dollars will be same for remittance and export earnings. Though the selling price of US dollars will be different, all the traders must sell the foreign currency at a unified price. Besides, Bangladesh Bank will also buy dollars at the interbank exchange rate.
As global markets remained closed on Sunday, exchange of foreign currencies was thin. The unified price took full effect on Monday.
Price of US dollar also rose on Sunday. As per new decision, exchange rate of US dollars was Tk 109.50 a dollar for export of goods or services, as well as for remittance.
Previously, banks exchanged US dollars at a rate of Tk 109 a dollar for remittance, Tk 108.50 a dollar with importers and Tk 109.50 for paying import liability. From now on, banks will exchange US dollars at Tk 110 a dollar with importers.
Bangladesh Foreign Exchange Dealers’ Association (BAFEDA), an association of banks involved with foreign currency exchange, and Association of Bankers’ Bangladesh (ABB), a body of commercial banks, had long been fixing the exchange rate based on supply and demand.
Since a single exchange rate was adopted, questions have arisen on how this exchange rate will be fixed and who would monitor it.
The BAFEDA and the ABB, however, will continue to fix the exchange rate.
Banks must inform the central bank about the daily interbank exchange rate, and central bank officials also collect data on exchange rate form markets. Thus, the central bank maintains a mechanism to monitor the exchange rate.
A Bangladesh Bank official of the concerned department told Prothom Alo the exchange rate of US dollars is monitored regularly, but actions are not taken accordingly all the time. Actions can be taken once the governor approved it. Banks are advised regularly to follow rules to conduct transactions. As a result, time will tell how much the single exchange rate will be effective.
An official of a private bank’s treasury department told Prothom Alo exchange rate of US dollar is fixed on the basis of its supply. Many a time, exchange rate was charged more than the prevailing rate, which was mentioned in documents, he said adding, because purchase of US dollars costs more.
This system to fix exchange rate must be lifted to overcome the foreign currency crisis entirely. Otherwise, decision will have to be taken to increase exchange rate after few days, and such rise would not stop, he said.
The IMF approved USD 4.7 billion in loans for Bangladesh in January this year. These loans came with a set of conditions including the implementation of a unified exchange rate.