Forex reserves fall further, dollar price above Tk 123

Despite official reductions in the value of the dollar by banks, the reality tells a different story. The dollar crisis has intensified, leading to a surge in prices. On the last day of the week, the price per dollar in remittance exceeded 123 taka, while the official declaration states the dollar price of remittance is 109.75 taka. 

Certain banks are allowed by the central bank to purchase dollars at a higher price, resulting in an increase in remittance, which is expected to reach 1.9 billion US dollars in November. 

Despite the central bank's efforts to bolster reserves through buying dollars from these banks, reserves have decreased by 120 million dollars in the last week.

According to International Monetary Fund (IMF) accounts last Wednesday, reserves dwindled to 19.40 billion dollars. However, the actual or net reserves are less than 16 billion. 

In response to the question about whether the crisis has ended with the falling price of the dollar, Syed Mahbubur Rahman, the managing director of the private sector Mutual Trust Bank, stated, "Since the price is falling, the crisis seems to be ending. However, remittance below 122-123 taka is not available, and we cannot buy dollars for this. Remittance has decreased significantly compared to last month, resulting in our inability to open LC as per demand. Many other banks, like us, are facing the same situation." 

Banks reduced the price of the dollar by 0.75 taka in two rounds during the crisis, bringing the purchase price for remittance and export earnings to 109.75 taka and 110.25 taka for imports.

However, dollar trading remains low at these fixed prices, and banks continue to buy remittance at rates exceeding 123 taka. The Bangladesh Foreign Exchange Dealers Association (BAFEDA) and the Association of Bankers, Bangladesh (ABB) made this decision in a meeting last Tuesday evening, and the new price will be effective from next Sunday, which is 0.25 taka lower than the previous official price. 

Meanwhile, some Shariah-based and conventional banks are engaging in competitive buying of remittance at higher prices. Consequently, in the first 29 days of this month (1-29 November), remittance reached at 1.83 billion dollars, compared to 1.52 billion in the same period last year.

Money exchange houses collected remittance at 121-122 taka, and banks in the country bought dollars from them at a higher price on Thursday.

An official from the treasury department of such a bank informed Prothom Alo that buying the dollar at a higher price is only done after receiving assurance that the central bank will not take any action, allowing the settlement of some old import liabilities.

Meanwhile, foreign exchange reserves in the Bangladesh Bank have further decreased, dropping by 120 million dollars in one week. According to the International Monetary Fund's (IMF) calculations last Wednesday, the reserves fell to 19.40 billion. This has been mentioned in the weekly report the Bangladesh Bank published Thursday.

Last Wednesday, the total reserve was 25.02 billion dollars. However, excluding the Export Development Fund (EDF), Long Term Fund (LTF), and Green Transformation Fund (GTF), the money given to Sonali Bank to buy aircraft for Bangladesh Biman, and the dollar given from the reserve for the Rabnabad channel excavation programme of Payra port, the amount stands at 19.40 billion dollars according to the IMF's BPM 6 method. However, not all of it is without liability.

Of this amount, there is a liability of over 3.5 billion dollars, of which a little over 2 billion is given to Bangladesh as loans as an IMF member country. Again, the banks have a little over a billion dollars to pay off their foreign liabilities. Besides, there is a bill to pay to the Asian Clearing Union (ACU) of about 500 million dollars. As a result, net or actual reserves will be less than 16 billion dollars.

Meanwhile, Islami Bank, facing a simultaneous dollar and liquidity crisis, is buying the dollar at a higher price and selling at a lower price to Bangladesh Bank. Bangladesh Bank is buying these dollars to increase its reserves. However, the government is selling more than this to meet its import liabilities. As a result, the reserve is strained.

To reduce the dollar crisis, the central bank, through a notification, has given banks the opportunity to collect high-interest deposits from abroad. It has been said that the banks will be able to pay more than 7 to 9 per cent interest by keeping dollars for a period of three months to five years. Interest rates in other countries are lower than this.