Friday, 30 September, 2022

Dollar market volatile again despite BB moves

The price of US dollar has turned volatile again in the open market with increasing demand for imports despite the recent policy measures taken by Bangladesh Bank.

The exchange rate of the US dollar in the kerb market was Tk 110.5 on Wednesday against the official rate of Tk 95.00 fixed by the central bank, according to sources.

Economists and market analysts said the increasing demand for dollar and speculative hoarding of the greenback at home make the situation volatile when the central bank is taking measures to stabilise the rate.

“We continue monitoring the market. The banks are following the official rates. But the rate remains volatile in the kerb market as the money changers make profits after purchasing dollars from banks,” Serajul Islam, executive director of BB, told the Daily Sun on Wednesday.

State-owned banks including Agrani Bank and Janata Bank sold a unit of the dollar at Tk 103.95 against the purchase rate of Tk 102.95 on that day.

According to the latest directives of Bangladesh Bank, the banks can profit Tk 1 per unit of US dollar while the spread was fixed at Tk 1.5 for the money exchange.

However, the banks and money exchangers have been hardly following the directives of central banks amid the increasing demand for dollars against lower supply.

Regarding the spread violation, BB spokesperson Serajul Islam expressed hope that the situation will be normal soon when the central bank will allow the retail branches of conventional banks to trade US dollars.

“Some 30 banks have applied for approval to trade US dollar at 988 branches. After the approval, the supply of dollar will be sufficient. Then the price gap will reduce gradually,” he said.

Bangladesh Financial Intelligence Unit (BFIU), an independent wing of Bangladesh Bank, recently sought bank details of 28 money exchange houses on suspicion of money laundering.

The agency also sought information from hundreds of Mobile Financial Services (MFS) agents for suspected involvement in digital 'hundi'. Recently the money changers and MFS houses have been given letters in this regard.

Policy Research Institute (PRI) Executive Director Ahsan H Mansur thinks the price of US dollar can’t be controlled with the market drive instead of taking monetary action.

“We should make Taka stronger through hiking interest rate at monetary policy. Otherwise, the speculation about the dollar will continue. Other fundamentals -- more export against less imports will work fine. Finally, we should change the mindset of hoarding of dollars at home for pocket maximization,” Dr Mansur, also chairman at Brac Bank, told the Daily Sun.

Earlier, the central bank had suspended five licences and issued show-cause notices against 42 moneychangers for allegedly violating the existing foreign-exchange rules and regulations.