Despite various efforts and an increase in remittance flows, the dollar market remains unstable. As the year ends, the value of the US dollar has surged once again, with the exchange rate reaching as high as 129 taka in the open market. Banks, struggling to meet excessive demand, are collecting remittances at rates at least 8 taka above the official rate of 120 taka, driving prices even higher. Experts attribute the rising demand for dollars to a spike in import LCs for food items ahead of Ramadan, while the lack of positive export earnings leaves remittances insufficient to balance the demand.
Sources indicate that, as per Bangladesh Bank’s directive, the maximum exchange rate for the dollar at banks was set at 120 taka, a rate that remained unchanged last week. This rate was 118 taka in June and 110 taka in December of the previous year, reflecting a 10-taka increase over the past year. In reality, however, the dollar’s value has risen by more than 18 taka. Recently, the dollar market has become increasingly volatile, leading the central bank to amend its earlier directive.
The new interbank dollar rate for remittances and foreign earnings has been set at 123 taka, up from the previous 120 taka.
A recent market review shows that at the beginning of last week, the dollar was sold in the open market for 122 to 124 taka, while interbank transactions were conducted at 120 taka. By the end of the week, the dollar was being bought and sold for 125 to 126 taka in the open market.
However, at the start of this week, there was a sharp surge, with the dollar selling for over 128 taka. Money exchange firms are purchasing dollars at 124 to 125.60 taka, forcing banks to buy from them at higher prices. As a result, the dollar is not available for less than 127 to 128 taka anywhere.
In various money exchange outlets in the capital's Motijheel, Paltan, Dilkusha, and Fakirapul areas, dollars are being traded at prices higher than the set rate, with employees reporting sales at 128 to 129 taka.
To stabilize the dollar market, the central bank imposed various restrictions on the import of non-essential goods. While this reduced imports, there was no significant growth in exports. Consequently, the country’s dollar reserves have become increasingly dependent on remittances.
In the first 21 days of this month alone, over 2 billion dollars in remittances were received, pushing total reserves to 24.95 billion dollars.
However, despite this increase, exports have not contributed significantly to dollar accumulation.
As a result, any slight rise in demand for dollars leads to significant market instability.
When asked about the situation, Syed Mahbubur Rahman, Managing Director of MTB, told Bangladesh Pratidin, "Currently, the higher demand may be contributing to the rise in the dollar rate. However, the instability that was once seen in banks due to the dollar shortage no longer exists. Most banks now have dollars available. The central bank is buying dollars instead of selling, which is helping to increase reserves. With the continued flow of remittances, the dollar shortage has eased. Banks are no longer imposing extra charges on LCs, which is a positive development. If the dollar rate remains high in the open market, it will soon stabilize."
Translated by ARK/Bd-Pratidin English
