The dollar price of remittance decreased by Tk5-6 to Tk118-119 yesterday following a meeting between the central bank governor and member banks of the Association of Bankers, Bangladesh (ABB), and the Bangladesh Foreign Exchange Dealers' Association (Bafeda) held on Thursday.
Exchange houses have offered lower prices for selling remittance dollars since Sunday morning. Banks collected remittance dollars at the highest rate of Tk124 on Wednesday and Thursday.
At the meeting with managing directors of 21 banks, the central bank directed banks to collect remittance dollars at a maximum rate of Tk116 including incentives from the government and banks' own funds.
The central bank has also sought information on the pricing of remittance dollars collected last Thursday, particularly from banks that received higher remittance volumes, according to several bank officials.
This was due to certain banks providing inaccurate information in their routine reports to the central bank regarding the dollar purchase price of remittances, export proceeds, and the dollar sale price of import settlements.
A senior official of a private bank told The Business Standard that several exchange houses had approached them with offers to sell dollars.
These offers came in two types, he said, "Firstly, many remitters directly send remittances to our bank through exchange houses. For the sale of dollars from these remittances, they [exchange houses] are quoting a rate of Tk117 to us.
"Secondly, when a bank is in need of remittance dollars, exchange houses sell remittances from other banks to them, seeking rates up to Tk118-119."
In this process, if a bank buys remittance dollars, Bangladesh Electronic Funds Transfer Network (BEFTN) is used to send the money to the account of the remitter of the other bank, he further said.
If the unusual price of remittances is not brought under control, it may further increase inflation, the managing director of a private bank told The Business Standard.
Exchange houses are reselling remittances received by one bank to another at an increased rate, and banks are purchasing these remittances in response to heightened demand, he mentioned.
The central bank must put a stop to this practice, otherwise the dollar price of remittances may rise again, he noted.
Meanwhile, bank officials expressed relief as remittance prices have slightly decreased, but they stated that the dollar crisis in banks has not abated.
The unusual behaviour of some banks and the profit-oriented approach of exchange houses were attributed to the sharp rise in the dollar price of remittances in the last two days of the previous week, they mentioned.
ABB, Bafeda decision
According to the latest decision by ABB and Bafeda, banks can pay a maximum rate of Tk110.50 to collect a dollar for remittance.
Following Bafeda rules, banks will be able to collect a dollar from exchange houses at a maximum rate of Tk113.26 with a maximum incentive of 2.5% from their own funds. Customers will get a rate of Tk116 with a government incentive of 2.5%.
However, in the case of selling these dollars, the banks cannot take the cost of incentives from the importers from their own funds. The dollar rate for import settlement was set at Tk111 maximum.
After Thursday's meeting, Md Mezbaul Haque, executive director and spokesperson of the Bangladesh Bank, said banks had assured them of not buying dollars beyond the rate set by Bafeda.
Commenting that the dollar market has become unstable after the announcement of incentives to the banks from their own funds, he said that in the last six months, the dollar rate of remittances has not increased much.
"As each bank gives different incentives, the market has been rattled. Banks have sought our [central bank] assistance in implementing the dollar rate fixed by ABB or Bafeda," he said.