Supply and demand determine the price of the dollar
Bangladesh Bank said on Thursday that it would allow the market, i.e. demand and supply, to fix the exchange rate of the US dollar against the local taka.
Earlier in May, the central bank had taken the same decision but then turned away from it to artificially maintain the strength of the local currency against the dollar.
Md Serajul Islam, spokesman for Bangladesh Bank, said the exchange rate would be set by banks, a method now followed around the world.
The Bangladesh Bankers Association (ABB), a platform of chief executives of banks in Bangladesh, and the Bangladesh Foreign Exchange Dealers’ Association (Bafeda), a platform of banks, will determine the rate, it said. he declares.
Banks in the country must buy and sell dollars based on an interbank greenback exchange rate set by the central bank.
According to banking standards, lenders are allowed to offer less than Tk1 over the interbank rate while buying dollars from exporters.
They can sell the greenback to importers, adding Tk1 to the interbank rate.
But most banks haven’t followed that for the past two months, some time after volatility in the foreign exchange market stemming from the aftermath of the Russian-Ukrainian war subsided.
Some banks on Thursday sold every dollar up to 107 Tk, which means they still do not meet banking standards.
A bank treasury official, speaking on condition of anonymity, said it was not possible for a lender to track the interbank rate due to the scarcity of the greenback in the market.
The taka has lost its value by 11.6% against the dollar in the interbank market over the past year.
Each dollar was trading at Tk95 on the platform on Thursday.
Had the platform been free from central bank intervention, the exchange rate would have been much higher as it would have been determined by supply and demand.
Selim RF Hussain, chairman of the ABB, said Bafeda and the ABB would convene a meeting in a day or two to decide on ways to keep the exchange rate stable.
Uniform rate of the dollar on Sunday
ABB and Bafeda are expected to set a uniform taka-to-US dollar exchange rate on Sunday after reviewing the country’s overall foreign exchange market situation.
Sources said banks in the country are currently collecting export earnings between Tk 99-102 per dollar, while collecting remittances at Tk 108-110 per dollar.
On the other hand, banks settle import payments at a rate Tk1 higher than the weighted average of export revenue collection rate and remittance collection rate.