According to sources as several local banks and foreign money exchange houses, last week several private banks collected remittance from at an exchange rate of Tk 95-97 a dollar last week.

There is no fixed rate or ceiling on the dollar exchange rate of dollars for banks. Usually, local banks fix the daily demand and price of dollars at foreign exchange houses and often money exchange houses collect remittance and then bargain dollar prices with banks and give those to the bank that offers the highest price.

Though Bangladesh Bank fixed dollar prices at Tk 87.90 a dollar for the banking sector, dollars are being sold much higher price. Many banks are collecting remittance at higher price to meet the dollar crisis and their needs. As prices have been fixed over remittance amid such circumstances, bankers are worried over the state of remittance for this week.

The central bank has no control and monitoring on the locally owned exchange houses operating in foreign countries. As a result, the central bank also remains in the dark on fixing dollar price for remittance. Besides, large money exchange houses likes Ria Money Transfer, MoneyGram, Transfast, Western Union, Express Money and IME play a big role in setting the dollar prices and banks collected remittances at this price.

Regarding this, Bangladesh Institute of Bank Management (BIBM) professor Shah Md Ahsan Habib told Prothom Alo unnecessary stock of dollars has begun even amid existing crisis. It is necessary to give a message to markets that prices of dollars will not go up as many people expect and the central bank has been able to do this. Besides, time will fix what the dollar prices will be. In the meantime, any bank stocking dollars illegally and playing role in rising prices, should be punished.

There is a limit on how much banks can reserve dollars and many banks are stocking dollars more than their limit amidst the crisis. Banks provided separate information on dollar stock to two departments of Bangladesh Bank. Noticing such the discrepancy, the central bank on 26 May warned banks of facing fines.

Meanwhile, Bangladesh Bank held a meeting with the leaders of the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) to discuss how to overcome the dollar crisis. Banks proposed the exchange rate of dollars at the meeting. They proposed fixing encashment of import bill at Tk 88.95 a dollar, remittance at maximum Tk 89.80 a dollar and interbank exchange rate at Tk 88.85 a dollar and sale of dollars to importers at Tk 88.95 a dollar.

Import costs already increased about 44 per cent because of the rise in prices of imported goods and freight costs. The dollar crisis appeared as export and remittance cannot meet such rising cost in import and the central bank selling dollars from reserve to mitigate the crisis.

Managing Director of Mutual Trust Bank Syed Mahbubur Rahman told Prothom Alo if all give same price for the dollar, remittance will be channelled through banks because transfer of such huge income is not possible via hundi. Hence, difference in dollar prices will drop in banks and kerb market due to the new decision and this might overcome the crisis, he added.

This report appeared in the print and online edition of Prothom Alo and has been rewritten in English by Hasanul Banna

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