Most banks in Bangladesh are reportedly quoting more than Tk 118 per US dollar, surpassing the official exchange rate set by the Bangladesh Bank under the crawling peg system.
This system was introduced on May 8 to manage exchange rates in line with the conditions of the International Monetary Fund (IMF) $4.7 billion loan program.
The Bangladesh Bank established a crawling peg mid-rate at Tk 117 per US dollar. Despite this, banks are quoting up to Tk 120 per dollar for opening letters of credit and more than Tk 118 per dollar for remittance and export bill collections.
Several chief executives of private commercial banks told media that the Bangladesh Bank had verbally shown them greenlight to quote Tk 1 more than the exchange rate to acquire US dollars amid the ongoing foreign exchange crunch. Consequently, banks are unofficially quoting at least Tk 118 per dollar, increasing the interbank exchange rate.
On Tuesday, the official interbank exchange rate was Tk 117.80, up from Tk 117.50 the previous week. This rate was Tk 110 on May 8, according to central bank data.
The daily star cited a senior official of PHP Group, a conglomerate based in Chattogram, “No US dollars are available in the market at less than Tk 119 to Tk 120," adding that banks are quoting their previous rates for letters of credit.
Before the introduction of the newly dollar exchange system or crawling peg, banks quoted Tk 118 to Tk 122 per dollar, although the official exchange rate was Tk 110. The crawling peg system allows a currency with a fixed exchange rate to fluctuate within a set band of rates.
The senior official also mentioned that the Bangladesh Bank is ignoring these violations since it has unofficially permitted banks to quote higher rates due to declining forex holdings.
By the end of April, the gross foreign exchange held by commercial banks in Bangladesh was $5.04 billion, an 8.19 percent decline year-on-year, according to the latest central bank data. This figure was also 7.21 percent lower compared to the previous month when banks collectively held $5.43 billion in foreign currencies.
Since August 2021, Bangladesh`s reserves have fallen by $24 billion. As of Wednesday, the gross international reserves stood at $18.42 billion, enough to cover imports for over three and a half months.
-20241102183609.jpg)
