Dollar crisis in kerb market, rate jump to Tk125 after BB hiked exchange rate

The US dollar almost disappeared in the unofficial kerb market amid a sharp rise in its price on Thursday, a day after Bangladesh Bank raised the exchange rate by Tk 7 in a single step.

The central bank introduced a crawling peg system on Wednesday to determine the exchange rate of the US dollar with the taka. By applying the system the regulator  increased the exchange rate of a dollar by Tk7 in a single day.

As a result, the greenback was hard to be found in the kerb market amid reports of hoarding of the currency by traders for profits in the future. Desperate buyers reportedly even paid up to Tk125 for one dollar in the kerb market to meet their travel and treatment expenses abroad.

On Thursday, Munira Ahsan, a private job holder told UNB she tried to buy $5000 from kerb market to meet her father‍‍`s treatment in Thailand. But she found the currency was available only at Tk125 per dollar in the kerb market.

She earlier sought to buy dollars from banks. The banks, she said, asked for multiple documents and had too many questions to sell 5000 dollars. A bank agreed to supply only 500 dollars, after taking 5 types of documents, said Munira.

 She then went to the kerb market as she had get the money for her father‍‍`s surgery at a hospital in Thailand.

The rate of the US dollar was around Tk117 in the informal market until May 8, but it shot up suddenly after the announcement of an exchange rate hike from the central bank, said a money changer in Paltan seeking to remain unnamed.

"It happened not only in the case of the US dollar. The exchange rate of other currencies also rose by Tk 4-5 overnight as the demand is higher for Saudil Rial as the Hajj season began,” he said.

The kerb market, a main source of cash dollar and other major currencies, registered a jump in the exchange rate a day after media reported that the central increased the exchange rate by Tk7 in a day.

Mannan Mia has been selling dollars in the open (kerb) market for several years. On Thursday this correspondent contacted him by phone posing as a buyer. He first said no dollar was available. But he agreed to sell at Tk 119 a dollar.

 Mesbaul Haque, executive director and spokesperson of BB told UNB that there are enough dollars in the banks, and people can go to banks to buy dollars.

“Our retail dollar has sufficient reserves and supply is good. Now who will sell it or not is up to him. Those who did not get dollars at the money exchange can buy dollars from banks. The central bank now has $50 million in reserve to meet retail and LC demand,” he added.

Prominent economist and former IMF official Dr Ahsan H. Mansur told this correspondent that the central bank has to increase the dollar supply in banks to meet the temporary shortage of greenback in the kerb market.

He said that the dollar traders got a signal to increase the rate of the foreign exchange more, that is why they are saying shortage of dollars after keeping in stock. When supply will increase, the rate will decrease.

Mansur also said that the exchange rate in the open market was always higher than banks, sometimes it increased to an unusual level due to lack of market monitoring.