Dollar remains strong at exchange houses
State-owned banks are focusing more on government import LC settlements
Money exchange houses are still asking for higher prices for the US dollar while most banks shy away from buying the greenback at such high rates to avoid the punishment of the Bangladesh Bank.
The exchange houses are charging more than Tk110 per dollar, saying they have to collect the dollars from expatriates at higher prices.
During a visit to the websites of several exchange houses on Tuesday, it was seen that MoneyGram was buying dollars from remitters at Tk103.95, Small World at Tk109.41 and Western Union at Tk108.73.
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On Tuesday, banks settled import letters of credit (LCs) at Tk105-106 per dollar. Exporters also got a price of Tk104 per dollar while encashing their export proceeds. The Bangladesh Bank sold $70 million at Tk95 per dollar as before.
State-owned banks are focusing more on government import LC settlements. For example, Agrani Bank bought $15 million dollars from the central bank on Tuesday for the government's import payments. The bank did not settle any import bills on that day.
Several treasury department officials at government and private banks said that the dollar price is now in a downtrend as inspection of the Bangladesh Bank has increased. According to them, the dollar market is now more stable than before.
However, the long-term condition of the market cannot be measured by two-three days of stability, the officials added. According to them, due to increased inspection of the central bank, banks are now more cautious in trading dollars than before.
Asked about the reason for the downward trend, the treasury department head of a private bank told The Business Standard that the demand for the greenback has decreased slightly. Imports also dropped. The dollar inflow has increased somewhat. As a result, prices are coming down.
He said, on average, the payment maturity of LCs is usually 90 days. Banks have become very strict about opening LCs from May onwards. Nonessential imports were discouraged. As a result, the pressure of payment of import LCs has also reduced slightly in a span of about three months. The decrease in the price of crude oil in the international market has also affected the demand for dollars.
Mentioning that exchange houses used to dominate the dollar price earlier, he said, "I have heard that many banks are buying dollars at higher prices. Competition has also decreased as banks buy dollars. Most banks are not buying dollars at higher rates."
The official said that the trend of remittances coming to banks has increased. He said, not only their bank, but most of the banks are receiving an increased amount of remittances.
"Our banks are also encouraging expatriates to send remittances through banking channels. Overall, we see a positive trend in remittance inflows," he added.
Due to the dollar crisis, the LC settlement rate reached a maximum of Tk112 on 8 August. On the same day, the central bank ordered the removal of the heads of the treasury department of five local and one foreign bank and asked the banks to transfer them to their human resource departments on charges of making an excessive profit from dollar trading.
The LC settlement rate of the dollar fell to Tk110 the next day. Since then, the dollar has been falling steadily. The central bank said that investigations are underway to find out whether there were any irregularities in some other banks that made excessive profits.
Dollar falls below Tk110 in the open market
Due to the decrease in the dollar price in banks, the rate also dropped in the open market. On Tuesday, most exchange houses in the country bought the dollar at Tk108 and sold it at Tk109.50.
The dollar price crossed Tk120 in the kerb market but after the intervention of the Bangladesh Bank, it has gradually decreased. In a recent meeting with the central bank, money changers were instructed to make a maximum profit of Tk1.50 per dollar. Since then, the money changers have become more cautious.
The central bank has suspended the operations of five money changers. In addition, the Bangladesh Bank also warned 42 money changers on various charges.
Apart from this, the Bangladesh Financial Intelligence Unit (BFIU) has launched an investigation to find out whether any money changer is involved in money laundering or hundi after the central bank's inspection revealed various irregularities. Bank account details of 28 money changers have been sought by the anti-money laundering unit.
