Dollar rate up again for remittances, exports

From now on, expatriate Bangladeshis will receive an increase of Tk0.50 for remittances, while the dollar rate for export proceeds will be higher by Tk1.

The new rate stands at Tk108.50 for remittances and Tk107 for export proceeds.

Including the 20.5% government incentives, the remitters will receive Tk111.25 per dollar.

The Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers' Association (Bafeda) made the decision on Wednesday.

Banks will implement the new rates from Thursday, Selim RF Hussain, ABB chairman and managing director of Brac Bank, told The Business Standard, after emerging from the meeting attended by managing directors of public and private banks.

Earlier on 30 April, the dollar rate for remittance and export proceeds was increased by Tk1 to Tk108 and Tk106, respectively.

A banker present at the meeting told TBS that several bankers raised questions about a high dollar rate in interbank transactions.

They said the central bank rules do not allow the sale of the greenback at a rate higher than the rate for remittance. It means, a maximum of Tk0.50 per dollar can be charged as various fees, but it cannot be included in the dollar rate.

However, according to data from the Bangladesh Bank, although the remittance rate was Tk108 in May, banks sold the dollar at a maximum of Tk108.75, they added.

The managing director of a bank told TBS that due to the increase in the rate of the dollar for remittances and export proceeds, banks' cost for dollars will also increase. As a result, it will slightly increase the value of the dollar in import settlements.

Bankers commented that the dollar crisis is worsening for increasing the rate in phases.

Several senior bankers, who requested anonymity, told TBS that the export proceeds have been increasing by Tk1 per month for the past few months. It is creating a pattern. Exporters also understand this very well. As a result, they are delaying in bringing the export proceeds to the country. This is affecting the dollar liquidity maintenance.

At the same time, importers also want to open letters of credit (LCs) quickly due to the risk of dollar price increase, they said, even though there are many import products in stock.

The bankers also admitted that it is not possible to open LCs as per the demand due to the shortage of dollars in the market.

According to data from the central bank, $1.42 billion in remittances arrived in the first 26 days of May.

For the last two months, bankers have claimed that the remittances are decreasing due to pressure from the central bank to bring the remittances at the dollar rate fixed by the Bafeda.

However, if the rate was high, the remittances would have been as high as $2.5 billion in a month, according to bankers.

In September last year, the top bankers set the dollar rate of remittance and export proceeds at Tk108 and Tk99, respectively. 

The dollar rate for remittances was later brought down by Tk1, to Tk107, last November. 

However, banks brought remittances at a rate higher than the fixed one. Bankers offered as high as Tk114 against the dollar for remittances in March.

When the news was published in The Business Standard under the title "Banks offer higher than fixed rate to remitters to build forex", the Bangladesh Bank was alerted ‍and instructed banks not to offer the higher rate. The central bank also held a separate meeting with ten banks that were identified for ignoring the rate.

With the latest hike for exporters, the dollar price for export proceeds has been increased for the 7th time since September last year.