Tuesday, 5 July, 2022

Dollar gets costlier on rising imports

The price of US dollar has been increasing in the country, leading to a price hike in the local market amid a surge in import payments against lower exports receipts. 

“We sold 1 dollar at Tk 91.80 today. There is no sign that the rate will go down soon,” an executive of a money exchange outlet in Uttara told the Daily Sun on Saturday.

The banks are selling US dollars at higher rates due to higher demand for dollars in the market. The businesses have to buy dollars from the open market (money exchange) to open letters of credit for imports.

Market insiders said the US dollar supply came under pressure as the country’s import payments are exceeding the export earnings.

The situation has also heated up the commodity market.

Export earnings and inbound remittance are two major sources of the US dollar in Bangladesh. Expatriates sent $1.85 billion home in March, taking the country’s foreign currency reserves at $ 45.94 billion, according to Bangladesh Bank data.

Economists have suggested reducing imports to ease the pressure on dollar reserves. They also suggested taking measures to control inflation.

Policy Research Institute (PRI) Executive Director Ahsan H Mansur said the price of dollars cannot be controlled with documents.

“The businesses are bound to buy dollars from the open market for LC opening. The import dependency is behind the pressure on dollar. We should reduce imports to control the situation,” Dr Mansur, also the chairman of BRAC Bank told the Daily Sun.

Bangladesh has to spend dollars for importing oil, fertilizer and other commodities.

“The official inflation rate is 6.18 percent. But it is higher in reality. The government should check the money supply to control inflation. Otherwise, the situation will not be favourable,” he said.

According to the eminent economist, there is no sign of inflation going down in the next three-four months.