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Interest cap lifted to pull in forex deposits

  • Staff Correspondent
  • 18 July, 2022 12:00 AM
  • Print news

The central bank lifted interest rate cap on non-resident foreign currency deposits (NFCDs) in a move to ease pressure in the foreign exchange market.

The central bank had earlier asked banks to set the interest rate in line with the euro currency deposit rates followed by the lenders in the euro zone.

The local banks offered interest rates ranging from 0.25 percent to 0.80 percent to the depositors as per the BB instruction.

But now, banks are allowed to avoid such ceiling to mobilise deposits from non-resident Bangladeshis, Bangladeshi origin individuals, including those having dual nationality and ordinarily residing abroad.

The withdrawal of the interest rate ceiling will also be applicable for foreign companies, firms registered or incorporated abroad, and banks and other financial institutions including institutional investors.

In addition, banks can also manage the foreign currency fund from the industrial units, which is fully owned by foreign nationals and entities, located in the export processing and economic zones.

The move came at a time when Bangladesh’s foreign exchange reserves have gone below the $40-billion mark, for the first time in the last two years.

The exchange rate has neared Tk 100 per US dollar for import and remittance payments and the interbank rate reached nearly Tk 94 a dollar because of rising demand for the greenback.

Price rise of commodities, be it food grain, petroleum, gas and industrial raw materials have ballooned Bangladesh’s import bills elsewhere in the world.

BB data show Bangladesh’s import bills stood at $81.49 billion in the first 11 months till May of FY22, up by 39 percent from the same period a year ago.