TE24 Business Desk:
The dollar rate for LC settlement hit a high of Tk 110 on Thursday (4th August). Thanks to the central bank’s continued crackdown, even the dollar-denominated price of import settlements, which recorded a stable price of Rs 108 in the last two days, is now higher than the curb market.
It broke the previous record and reached Tk 109 on Wednesday.
Bangladesh Bank is not offering dollars for private sector imports due to dwindling foreign exchange reserves, thus increasing dollar rates for LC settlement.
Some state-owned banks receive dollars from the central bank at the interbank exchange rate only for imports from the government and essential commodities. However, this offer is not sufficient to meet the bank’s requirements
For example, Agrani Bank on Thursday said it received only $15 million from Bangladesh Bank against a claim of $100 million. Insiders say importers have never been charged so much against currency.
After the Eid-ul-Azhar holiday, on July 13, the bank charged the importer 98 taka for one dollar, but on July 21, it increased by taka 4 to taka 102. Got it – in just 6 business days.
It continued to rise for the next two days before holding steady at $105,000 until early August. For the last three days, prices have started to rise again. In the 16 working days since bank opening after Eid till August 4, the dollar price for LC settlement increased by Tk 12.
In addition to the ongoing dollar crunch, selling dollars at higher rates through exchanges contributed to the increase in dollar rates for LC settlements.
Currently, the maximum dollar value for import payments depends on the rate at which banks are able to recover remittance dollars from foreign currencies.
On July 13, money changers sold remittance dollars at Rs 100, which rose to Rs 111-112 on Thursday (August 4).
However, banks bought small amounts of dollars at higher rates.
106-108 may be the number of people managing the dollar.
Under normal circumstances, there are multiple sources to raise the dollar, such as buying currency from other banks. However, due to the ongoing crisis, most banks do not have extra dollars. As a result, we have had to rely more on [foreign] exchange to get dollars, a finance officer at a private sector bank, who did not want to be named, told Business Standard.
Due to dollar shortage in import settlement, most banks are willing to buy dollars from money changers. Payment could have been made but private banks charged the importer 106 to 110 taka per dollar through bank customers.
The general dollar rate for LC processing has gone up because private banks have to draw dollars from foreign exchange offices to make large payments.
In such a situation, the exporter will charge a higher price if the export proceeds are in cash. On July 13, the exporter hit a peak dollar exchange rate of 95,000 and reached 102,000 on Thursday (August 4). Ahsan H. Mansoor, Executive Director Dr
The Policy Research Institute, believes that a higher dollar rate for LC payments will reduce imports.
We are not implementing fiscal policy properly. The government made its biggest mistake by fixing interest rates, which also caused the dollar to appreciate, he told Business Standard. Money becomes more attractive when interest rates rise. But, if you raise interest rates, so will inflation.
Economists say the government is now letting the market determine the exchange rate. “But it wasn’t done voluntarily, the central banks did it when they were forced to do it. It wouldn’t have happened if the market had been left alone,” he said. Fearing punishment.
