Where will $ stop?



News desk, Barta24.com
ছবি: সংগৃহীত

ছবি: সংগৃহীত

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The rising rate of the US dollar against the local currency has placed a huge burden on local importers and triggered a spillover effect on the local market over the last several months.

The Bangladeshi Taka devalued further against the greenback on Wednesday in the wake of dollar shortage in the banking sector.

The interbank exchange rate hit Tk 86.20 per dollar for the first time on the day, up from Tk 86 on the previous day, according to the data from the central bank. The exchange rate increased after a couple of months.

Importers also accused some banks of ‘manipulating’ a dollar crisis and imposing a high rate in case of opening letters of credit for import.

They said the Bangladesh Bank should look into the matter as commercial banks should not charge dollar rates exorbitantly against L/C opening.

The interbank exchange rate of the US dollar started rising since July last year due mainly to the sharp rise of import payment when the exchange rate of the American greenback was Tk 84.80.

A high official of a Chattogram-based industrial group told The Business Post that banks are imposing Tk 89 per dollar in case of opening letter of credit despite the interbank exchange rate being Tk 86.20 per dollar.

“As a result, we have been suffering much to pay import bills.”

“What is the Bangladesh Bank doing now to cool the market,” he posed a question, saying the regulator should intervene in the foreign exchange market by releasing the US dollar from the reserves, or else it would be prejudicial to industrialisation.

Mohammad Mustafa Haider, Group Director of TK Group of Industries, recently told The Business Post that the price of consumer goods would increase further in the local market as the import cost had risen drastically due to the hike of US dollar rate.

He said now most banks are imposing a high rate in case of opening a Letter of Credit (LC) by taking the advantage of an ongoing dollar crisis.

The Federation of Bangladesh Chambers of Commerce and Industry president MdJashimUddin attributed the price hike of industrial raw materials and essential commodities to the rise in import cost as the dollar rate has appreciated against Taka.

“The high import cost is creating pressure on importers; the central bank should pump US dollar into the market from the reserves, which will help cool the situation,” opined the chamber leader.

“We are continually injecting US dollar into the market. But, how much more can it be drawn from the reserves?” Bangladesh Bank Chief Economist HabiburRahman posed the question.

The banking regulator sold more than $ 3.73 billion to the country’s banks as of March 23, this fiscal year, as per the data.

Foreign exchange reserves stood at $ 44 billion on March 15, down from $ 46 billion on February 28 this year due to the US dollar selling spree of the central bank.

The BB chief economist said there was no other way without devaluing the local currency.

“However, we are also concerned about the current state of the foreign exchange market,” he argued.

Asked about the mercenary role of the country’s banks when it comes to letter of credit (L/C) opening, the central bank economist said the BB cannot interrupt on banks on rates against dollar.

“We simply cannot intervene in banks’ L/C rate in an open market,” HabiburRahman said.

Many banks are charging even more than Tk90 against each dollar, more Tk 4 than the BB-set exchange rate.

The mercenary attitudes of banks have left industrialists and importers in a dire situation stoking price hike for both essential food items and industrial raw materials.

An industrialist, however, said the BB’s stance on free-market, or open market is nothing but a vague term, as the central bank’s dictated deposit and lending rates do not go with its stated position.

“Open market formula should not apply only for exchange rate. The BB should fix the dollar rate against Taka to be complied by the country’s all commercial banks,” an aggrieved industrialist told The Business Post.

Why do banks face US dollar shortage?

Economists and bankers said the increasing trend in import payment due to the price hike in the global market, declining trend of remittance and the end of deferral support on payments for imports are the key reasons behind the dollar shortage.

The inflow of remittance to Bangladesh has fallen further this February despite increased incentives from the government, and experts blamed the return of “hundi” system – an illegal method of cross-border transaction – for this decline.

Bangladeshi expatriates sent $ 1.5 billion in February 2022, a 16 per cent drop when compared year on year.

February’s figure is 12.22 per cent lower than that in the previous month when remittance inflow stood at $ 1.7 billion, as per the latest data from the central bank.

Agrani Bank Managing Director and CEO Mohammad Shams-Ul Islam told that import payments have gone up sharply as the country’s business and the economy started to revive from the pandemic fallout.

Asked why banks are charging more than the interbank exchange rate, Agrani Bank Managing Director said that the public sector banks are not imposing higher rate than the declared buying/ selling rates. But, a number of private commercial banks are imposing higher dollar rates on importers than the BB declared rate, he blamed.

The US dollar was traded at more than Tk90 against each US dollar in the kerb market on Wednesday.

The BB purchased $7.93 billion from local banks in the last fiscal year.

During the July-January period of this fiscal, import payments rose by 46.23 per cent to $ 46.67 billion. However, ZahidHussain, former lead economist of the World Bank, Dhaka office, said the import payment is rising sharply due to price hikes in the global market.

“Not only Bangladesh, but all the import-dependent countries are also facing pressure due to such price hike. The Russia-Ukraine war also impacted the price of commodities in the global market,” added the noted economist.

Zahid observed that the high import payment and price hike in the global market hit the general people hard.

Courtesy: The Business Post

   

A remittance of 141 crore dollars came in 22 days



Staff Correspondent, Barta24.com, Dhaka
Photo: Collected

Photo: Collected

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In the first 22 days of this month of March, expatriates sent remittances of 141 crore 44 lakh dollars through legal channels and banking channels. According to this, an average of 6 crore 43 lakh dollars of remittances came to the country every day.

This information was revealed in the updated report of Bangladesh Bank on Sunday (March 24).

A review of the data showed that expatriates sent 141 crore 44 lakh 50 thousand dollars to the banks on the 22nd day of March. Of this, 18 crore 24 lakh 60 thousand dollars came through the state-owned banks.

Besides, 2 crore 15 lakh dollars came through specialized banks, 120 crore 47 lakh 80 thousand dollars through private banks and 57 lakh 10 thousand dollars through foreign sector banks.

According to the Central Bank, from March 16 to 22, expatriates sent 39 crore 54 lakh 70 thousand dollars to the country. From March 9 to 15, remittances of 50 crore 60 lakh 70 thousand dollars have arrived in the country. Besides, 51 crore 29 lakh 10 thousand dollars came from 1 to 8 March.

And last February, 216 crore 60 lakh dollars remittances came to the country which is the highest in the current financial year. 

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Market system must be freed from influence of invisible hand: FBCCI



Staff Correspondent, Barta24.com, Dhaka
Photo: Collected

Photo: Collected

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Business leaders have called for the supply chain to be freed from the influence of the invisible hand to stabilize commodity markets.

They agreed on this in the price monitoring committee coordination meeting of FBCCI at the FBCCI office in Motijheel on Sunday (March 24).

The meeting was presided over by FBCCI senior vice-president Md. Amin Helali. He said that common people often make harsh comments about the prices of goods. But most traders want to conduct their business transparently. All of us are getting a bad name because of a few people. It is important to get out of this situation. He commented that an ideal businessman can never become a black marketer.

The senior vice president of FBCCI Amin Helali urged the market committees to record the problems and obstacles in each market of the capital and submit them to FBCCI. He said that FBCCI will discuss the problems of traders at the highest level of the government.

Warning against traders who destabilize the supply chain, the FBCCI senior vice-president said that the supply chain must first be freed from the influence of the invisible hand to keep commodity prices within the reach of the masses. We will actively work to stop visible and invisible extortion in the markets.

The meeting was attended by retailers and wholesalers from different areas of the capital. At this time, vendors of different markets of the capital said that vendors with permanent licenses are not responsible for destabilizing the market. They also claim that those who buy and sell goods on the sidewalk or road by subsidizing various quarters are responsible for destabilizing the market.

Permanent licensed peddlers complain that when trucks loaded with goods enter the markets of Dhaka at night - the goods are exchanged 2 to 3 times while in the vehicle and the price increases. In this case, floating traders are largely responsible, but the government's market control agencies raid, jail and fine the permanent traders. And the temporary or floating traders disappear before the light of day. As a result, in all cases, the permanently licensed hawkers have to suffer the punishment.

It was informed in the meeting that the price monitoring committee of FBCCI will go to different markets of the capital and meet with the market committees in the next few weeks. At this time, Amin Helali urged the market committees to collectively move forward to solve the problem.

The meeting was attended by FBCCI director Hafez Haji Haroon-or-Rashid, Hafez Haji Mohammad Enayet Ullah, Azizul Haque, Kausar Ahmed, Md. Niaz Ali Chisti, Haji Alauddin, Md. Abul Hashem, Price Monitoring Committee members, market committee leaders and business leaders.

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Exim and Padma Bank are merging



Staff Correspondent, Barta24.com, Dhaka
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Photo: Collected

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Private Padma Bank is going to merge with Exim Bank. In the meantime, Bangladesh Bank has also been informed about the merger of the two banks.

This decision was taken unanimously in the board meeting of Exim Bank on Thursday (March 14).

Chairman of Exim Bank Nazrul Islam Mazumder confirmed this to the media.

According to a director of Exim Bank, a decision has been taken to merge private Padma Bank with Exim Bank. Soon it will be sent to Bangladesh Bank for permission. It will come into force after the approval of the regulatory body.

The same information was also known from a related official of Padma Bank.

Earlier, Bangladesh Bank had said that weak banks would be allowed to voluntarily merge by December. Failing this, a final decision on them will be taken in March.

Recently, Bangladesh Bank published the Banks Health Index (BHI) and Heat Map. According to that report, Padma Bank is in the red zone and Exim Bank is in the yellow zone.

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Signing agreement of Global Islami Bank Plc with Bangladesh Bank



Staff Correspondent, Barta24.com, Dhaka
Signing agreement of Global Islami Bank Plc with Bangladesh Bank

Signing agreement of Global Islami Bank Plc with Bangladesh Bank

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Two agreements have been signed between Global Islami Bank PLC and Credit Guarantee Department of Bangladesh Bank. The agreement was signed to provide credit guarantee facilities to women entrepreneurs and the agricultural products processing sector with the aim of achieving the desired expansion of small scale industries, job creation and economic growth.

The agreement was signed on Tuesday (March 12) at Jahangir Alam Conference Hall of Bangladesh Bank, Head Office.

Under these two agreements, Global Islami Bank will be able to make unsecured investments in women entrepreneurs and agricultural products processing sector by taking the credit guarantee facility of Bangladesh Bank.

In the presence of Bangladesh Bank Deputy Governor Noorun Nahar and Executive Director Mohammad Jamal Uddin, Managing Director Syed Habib Hasnat on behalf of Global Islami Bank and Nahid Rahman, Director of Credit Guarantee Department on behalf of Bangladesh Bank signed the agreement. Global Islami Bank's Executive Vice President and Head of Investment Division SM Mizanur Rahman was also present on the occasion.

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