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Bangladesh Bank on Thursday claimed that it would allow the market, meaning demand and supply, to fix the exchange rate of the US dollar against the local taka.
Earlier in May, the central bank had taken the same decision but later backtracked from it to artificially keep the local currency strong against the dollar.
Md Serajul Islam, spokesperson of Bangladesh Bank, said the exchange rate would be fixed by banks, a method now followed across the globe.
The Association of Bankers, Bangladesh (ABB), a platform of managing directors of banks in Bangladesh, and the Bangladesh Foreign Exchange Dealers’ Association (Bafeda), a platform of banks, will determine the rate, he said.
Banks in the country have to buy and sell dollars based on an interbank exchange rate of the greenback set by the central bank.
As per the banking norms, lenders are allowed to offer Tk1 less from the interbank rate while buying dollars from exporters.
They can sell the greenback to importers, adding Tk1 to the interbank rate.
But most of the banks have not followed this in the last couple of months, sometime after the volatility in the foreign exchange market resulting as an aftermath of the Russia-Ukraine war had subsided.
Some banks on Thursday sold each dollar for up to Tk107, meaning that they are still not following the banking norms.
A treasury official of a bank, on condition of anonymity, said it was not possible for any lender to follow the interbank rate due to the scarcity of the greenback in the market.
The taka lost its value by 11.6% against the dollar in the interbank market over the past year.
Each dollar traded at Tk95 on the platform on Thursday.
Had the platform been free of the central bank’s intervention, the exchange rate would have been much higher as it would have been determined by demand and supply.
Selim RF Hussain, chairman of the ABB, said both Bafeda and the ABB would arrange a meeting in a day or two to decide on ways to keep the exchange rate stable.
Uniform dollar rate Sunday
ABB and Bafeda are expected to fix a uniform exchange rate of Taka against the US dollar on Sunday after reviewing the overall situation of the country’s foreign exchange market.
Sources said banks in the country are currently encashing export proceeds between Tk99 and Tk102 per dollar, while they are collecting remittances at Tk108-110 per dollar.
On the other hand, banks are settling import payments at a rate Tk1 higher than the weighted average of the export proceeds encashment rate and remittance collection rate.
(DT)
