Large exporters bypass fixed dollar rate to earn more 

Large exporters are allegedly not adhering to the exchange rate set for export proceeds and are selling the highly sought-after dollars to importers directly at inflated prices.

As a result, the price of dollars bought by importers is officially lower but actually higher, according to industry insiders.

The Bangladesh Foreign Exchange Dealers Association (Bafeda) and the Association of Bankers, Bangladesh (ABB) have increased the dollar rate for exporters by Tk1 to Tk108.5 since the beginning of this month.

Exporters are still not satisfied, as the dollar rate for remittances is higher than that.

Senior officials at several banks explained the dollar selling process, saying exporters and importers negotiate a dollar rate – around Tk112-113 – between themselves.

The exporter then asks his correspondent bank to sell the dollars at the interbank rate to the bank, which settles bills on behalf of the importer.

Both banks are aware of the matter but carry out the process to maintain a relationship with their clients, the officials added.

Once the process is done, the importer, as per the agreement, pays the additional Tk3 or Tk4 per dollar separately to the exporter.

The managing director at a private bank said even though banks have their own dollar shortage, they are selling dollars through the interbank market due to requests from businessmen.

Sharing the experience of his bank with The Business Standard, he said a businessman went to him a few days ago and asked him to sell $5 million of export proceeds from his export retention quota account to a second-generation bank.

"Our bank has a longstanding relationship with that businessman. Additionally, given his status as a large exporter, it becomes difficult for us to decline his request. Due to these factors, we sold the dollar at an interbank rate of Tk108," he said.

"However, if we were to use these dollars in import settlements, there would be an opportunity for us to generate some profits," he added.

 A senior leader at an association in the garment sector admitted to selling dollars to importers at higher rates and said banks are collecting remittances at higher rates.

"Many banks are offering Tk111-112 to buy remittance dollars. But in our case, all the restrictions have been kept. At present, big exporters are able to sell the dollar at a good rate. However, small exporters are selling dollars at the fixed rate," he told TBS.

On 12 September last year, the dollar rate for remittances was set at Tk108, while it was Tk99 for exporters. Since then, Bafeda and ABB have increased the rate for exporters 12 times and changed the exchange rate for remittances six times.

Although the central bank set the rate for selling dollars from its reserve at Tk109.50 in line with the interbank rate, market insiders reveal that most banks are opening import letters of credit (LCs) at Tk114-116, disregarding the official rate.

Due to the higher dollar rate in the market, the Bangladesh Bank had to offload $1.14 billion from its reserves in July to cover import expenses. This trend has been consistently observed for over a year, indicating a sustained challenge in managing the country's import costs.