Mashrur Arefin, managing director and CEO of City Bank, and vice-chairman of the Association of Bankers Bangladesh (ABB) breaks down how the uniform dollar rate set by the Bangladesh Bank is functioning in different areas.
The central bank on Tuesday supported us on import payments by supplying dollars to us at the interbank equivalent rate of Tk89.00. We settled smaller import bills of below $0.1 million with that support. I also received $5 million from the central bank against food and energy letters of credit payment.
But with regard to large import bills, most banks settled those between Tk92-94 per dollar by adding their risk management premium with the fixed Tk89.15 per dollar. We are already at a "short" position on dollars. From "short" position or negative position, we settled the bills, which was risky, so we added some premium.
Everyone bought foreign remittance dollars from exchange companies at the prescribed Tk89.20 rate. But Western Union (WU) sold it to us at Tk93.62 and Moneygram (MG) at Tk95.00. This is unfair and will ultimately make the central bank's rate related directives ineffective.
If we buy remittance dollars from WU or MG at higher prices, how will we then comply with Bangladesh Bank's Tk89.15 selling rate for import settlements?
Today [Tuesday] only a few export bills came because New York was closed for three days, hence export proceeds were less. However, however much proceeds came, the industry in general gave just Tk20-30 paisa above the prescribed Tk88.15 Telegraphic Transfer Clean rate, which is ok. We cannot make exporters too unhappy.
No transaction took place at the prescribed Tk89 rate. Because the banks which will sell dollars in the interbank are in "long" position in their dollar holdings, and they bought those dollars earlier at a much higher rate like Tk94- 95 per dollar.
So, they basically held onto those dollars for future customers. Therefore, there was no transaction in the interbank market today at the Tk89 rate.