Dollar rates for remittance, export proceeds raised by Tk1

The exchange rate of dollars for both remitters and exporters has been increased by Tk1. 

Banks will offer Tk108 per dollar for remittance and Tk106 for export proceeds from Tuesday when the new rate will come into effect.

The decision came at a meeting between the Association of Bankers Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) on Sunday (30 April). 

The managing directors of the country's public and private banks were present at the meeting.

Confirming the development to The Business Standard, ABB  Chairman and Brac Bank Managing Director Selim RF Hussain said the meeting asked the banks not to bring in remittance paying more than the fixed rate.

The dollar rate has been increased as per instructions of the central bank, said a source present at the meeting. 

"It was also decided at the meeting that from now on, a difference of Tk2 will be maintained in the dollar rate for export proceeds and remittances. That means, if the rate of export proceeds increases, the price of remittance will also increase," said the source.

The central bank opted for hiking the dollar rate following a decline in remittance inflow during Eid, he added.

He also said, "The country received more than $2 billion in remittances in March when the rate was higher. Also, the remittance flow through hundi came down at the time. But, the amount decreased considerably in April even though it was the month of Eid."

As of 21 April, remitters sent $1.27 billion indicating that the earnings may stand below $2 billion for the month. 

However, if the rate was high, the remittances would have been as high as $2.5 billion, according to bankers.

In September last year, the BAFEDA and ABB, in a joint meeting, decided to fix the dollar rate of remittance and export proceeds at Tk108 and Tk99 respectively. 

The dollar rate for remittances was later brought down by Tk1, to Tk107, last November. 

Meanwhile, the dollar rate for export proceeds was increased gradually, but the rate for remittance was not increased for the last six months. 

However, the banks brought remittances at a rate higher than the fixed one. 

Bankers offered as high as Tk114 against the dollar for remittances in March.

When the news was published in The Business Standard under the title "Banks offer higher than fixed rate to remitters to build forex", the Bangladesh Bank was alerted.

At a bankers' meeting in the first week of April, the central bank strictly instructed commercial banks not to offer a higher rate than the rate set by the Bangladesh Foreign Exchange Dealers Association (BAFEDA). 

The central bank also held a separate meeting with ten banks that were identified for ignoring the BAFEDA rate.

Although there were more than 20 banks who offered higher rates then, most of the banks gave Tk107 after the meeting, which affected the country's remittance income afterwards.

With the latest hike for exporters, the dollar price for export proceeds has been increased for the 6th time since September last year. 

Managing director of a bank told TBS that due to the increase in the rate of the dollar for remittances and export proceeds, banks' cost for dollars will also increase. As a result, it will slightly increase the value of the dollar in import settlement.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice-President Shahidullah Azim said the increase in dollar rates has given relief to exporters, but the export orders have decreased. 

"Currently, the amount of orders we receive here has decreased a lot compared to earlier times. As a result, export proceeds have also decreased. Apart from this, utility costs, including electricity and gas, have increased a lot. So, we will not benefit much from the increase in the dollar rate as export orders have decreased," he told TBS.