Bankers to review dollar rate fixing process
Bafeda, ABB meet Monday, unlikely to change dollar rates on remittances and export proceeds
Two weeks after setting dollar rates, bankers are meeting again to review the process of setting the greenback purchase rates amid debates over the prices offered for remitters and exporters.
Banks have already maintained dollar transactions under the new rates for around ten working days when they faced some minor problems also. These issues will mainly be discussed in the meeting, according to bankers.
The Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers' Association (Bafeda) will sit in a meeting on Monday afternoon at the Sonali Bank headquarters in the capital.
On 11 September, Bafeda and ABB decided to buy export proceeds at Tk99 and remittance dollars at Tk108.
Besides, a new formula was also introduced for banks to determine the buying cost of the dollar. According to the formula, the weighted average cost will be calculated based on the actual costs on a rolling basis over a five-day period.
In a meeting with Bafeda a few days ago, the treasury heads of banks shared their views on the process of setting daily dollar buying rates.
Seeking anonymity, the treasury head of a private bank told The Business Standard that at the meeting many of them suggested increasing the rolling weighted average of dollar purchases from five-day to a period of 10 to 15 days.
Several sources of the Bafeda and the ABB have hinted that the dollar rates set for remittances and export proceeds are unlikely to be changed immediately.
According to them, to determine the rates in these two cases, a discussion is needed with the Bangladesh Bank. Without discussing with the central bank, there is little chance of taking steps like setting new rates.
In addition, many people have also talked about the average rate prepared by Bafeda every day on the basis of 55 banks' dollar purchase costs. Banks use the rate to evaluate their dollar reserves at the end of the day. Bankers have called for changing the process of fixing the rate.
According to a source familiar with the development, a report has been prepared with several recommendations made at the meetings arranged by Bafeda. It will be presented in today's meeting.
Meanwhile, exporters believe they are unfairly treated by setting lower rates for encashing export payments. Due to low rates, many exporters are keeping dollars in their accounts for up to 30 days as allowed by the Bangladesh Bank. Due to these reasons, export payment encashment in banks has decreased, bankers said.
Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told TBS, "Remittances are given the rate of Tk108, while exporters are given Tk99. This is discriminatory towards us. Again when we go to buy dollars for import, Tk104-105 is charged. We, businesses, are suffering from this."
He, however, denied the allegation of not enchasing export proceeds due to the low rate, adding, "Leaving the money in banks for a day is also a loss for us. Most exporters are encashing. Some 5-10% exporters may be withholding export proceeds."
Banks are saying that now there is instability in the dollar market globally. A large part of the export earnings that exporters bring in is spent on opening back-to-back letters of credit (LCs) on raw material imports.
Then the exporters get a slightly lower rate to encash the remaining dollars. However, considering the overall situation, they urged the exporters to accept this decision for a temporary period, the banks added.
According to Bafeda, on Sunday, the weighted average of 55 banks' purchase of dollars stood at Tk102.09. The price of buying dollars in various banks was a minimum of Tk99 and a maximum of Tk106.75.