Saudi riyal price up in banks as demand soars ahead of Hajj

Banks saw a rise in the price of the Saudi riyal amid soaring demand as more flights are being operated from and to Bangladesh and Saudi Arabia ahead of the upcoming Hajj season.

Price of Saudi Riyal increased by Tk 2 a riyal at banks over the past three months and more than Tk 7 a riyal in the past year. Kerb market also saw a rise in Saudi Riyal price, but the bank rate is surprisingly Tk 1-1.15 higher than that rate at kerb market and money exchange.

The rise in Saudi Riyal price also increases Hajj expense. Pilgrims in Bangladesh will start departing for Saudi Arabia on 21 May to perform Hajj, which may be observed on 27 June upon the sighting of moon. This year, 127,000 pilgrims can perform Hajj from Bangladesh, with registration costing 15,622 Saudi Riyal (approximately Tk 883,529) at private sector.

Since pilgrims usually pay all costs prior to hajj and also carry little amount of foreign currency, they have started purchasing Saudi Riyal since April last. A Bangladeshi pilgrim, according to instruction of Bangladesh Bank, can carry 1,200 USD dollars or equivalent foreign curacies during Hajj.

Speaking to Prothom Alo, a Hajj pilgrim Faruk Ahmed said, “It is normal that price of riyal will be less at bank, but it is opposite now and I never heard of such situation before.”

Sources said Janata Bank sold Saudi Riyals at Tk 29.50 on 5 February this year, which increased to Tk 30.50 a riyal on 5 March and Tk 31.20 on 5 April this year. Price of Saudi riyals varies by 10-20 paisa at Sonali Bank, Agrani Bank and Rupali Bank.

Meanwhile, Saudi riyals are being sold at Tk 29.75-29.85 a riyal at kerb market and money exchanges at capital’s Motijheel with some selling 500 riyal note at Tk 29.80 per riyal and 100 Riyal note at Tk 30.30 per riyal. Price of Saudi riyal was Tk 24 in March 2022.

Jalal Ahmed, a currency trader from Motijheel, said demand of Saudi riyal remains very high during this time, but supply is slightly low, causing a rise in the price. Yet, price is lower at kerb market than bank rate.

According to bankers, banks import neither US dollar nor Saudi riyal. Bank purchases currency from people returning from foreign countries and then sell those. Banks usually has a good supply of US dollars because expatriate workers returning home with other currencies usually sell those at kerb market and money exchange. Besides, bank has higher operation cost than kerb market. As a result, price of foreign currencies other than US dollar is slightly higher in Banks than kerb market.

Money Changer Association of Bangladesh's senior vice president SM Zaman told Prothom Alo said, “We profit 10-15 paisa per riyal exchange whereas banks profit Tk 1-2 riyal, and that is why price is higher at banks.”

Speaking to Prothom Alo on condition of anonymity, an official concerned of Bangladesh Bank said price of riyal is higher at banks than outside because of rise in supply and a similar situation happened for US dollar.

It is also better that dollar will face no additional pressure because of hajj. Otherwise, pilgrims would take dollars and convert those at Saudi Arabia, and that might increase price of dollar at kerb market, he added.

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