It seems that capping the price of US dollars has not paid off as the move reduced the supply of the greenback, instead of bringing down its exchange rate. In consequence, the dollar crisis continues to intensify.
The traders are not cashing in their export earnings in hope that the exchange rate would go up further in the coming days. On the flip side, the inward flow of remittance has declined as the expatriates now prefer alternative options with a better exchange rate.
All these issues forced some banks to delay payment of import liabilities.
Currently, the exporters are allowed to retain export proceeds for up to 30 days. The Bangladesh Bank had initially instructed to monetise the earnings within one day given the dollar crisis, but it later revised the timeframe to 30 days as per demand of the exporters.
The bankers feared that the ongoing crisis would take more time to overcome. The nation will embrace a bigger crisis if the current strategy to normalise the situation fails. Some are blaming the central bank’s decision to hold up the dollar price.
The Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers Association (BAFEDA), as per instruction from the central bank, fixed the maximum price of dollars for export earnings at Tk 99 while Tk 108 for remittance.
Dollar market
According to BAFEDA, the National Bank bought dollars at Tk 112 on Thursday while City Bank at Tk 110, Islami Bank at Tk 109 and Pubali Bank at Tk 108. There are allegations that the importers still have to pay their liabilities buying dollars at higher prices.
According to the prices fixed by the banks, state-owned Sonali Bank charged the importers Tk 106.8 for each greenback while Janata Bank charged Tk 106.5, Agrani Bank Tk 105, non-government Prime Bank Tk 101.92, Eastern Bank Tk 103, Dutch-Bangla Bank Tk 105, BRAC Bank Tk 104.8, and City Bank Tk 107.5.
Dollar supply on decline
The banks used to pay Tk 104 to Tk 105 per dollar for cashing in export earnings. The amount declined to a maximum of Tk 99 last Sunday. This is why the exporters are retaining their earnings for a better price in the coming days.
The bank officials said the traders are holding on to export earnings in the hope of an appreciation in dollar price, which slowed down the supply of the greenback in the market and intensified the crisis.
However, BKMEA Executive President Mohammad Hatem told Prothom Alo, "Some 5 per cent of traders have the capacity to continue business without cashing in dollars. But the remaining ones are in a dire strait as the banks are purchasing the export bills at Tk 99 per dollar.”
“Besides, we have to buy each dollar at Tk 104 while paying the LC liabilities. The garment sector will collapse if the current trend continues,” he added, seeking immediate intervention by the central bank in this regard.
On the other hand, a private sector bank used to receive an average of USD 10 million in expatriate income per day, but the income dropped to USD 1 million after fixing the maximum price of dollars.
Exchange house officials said expatriates used to fetch higher prices and the rate declined now. Now, they are sending money through alternative means.
However, some exchange houses are also hoarding dollars in the hope of a further rise in prices.