Dollar rates for export proceeds raised by Tk1, remittance by Tk0.50

The Bangladesh Foreign Exchange Dealers' Association (Bafeda) and the Association of Bankers, Bangladesh (ABB) have adjusted the exchange rate of the US dollar at Tk109.50 for both the export proceeds and remittances.

As a result, remittances and export proceeds will be bought at the same price after almost a year.

In a meeting of the two organisations yesterday, the dollar rate for remittance was raised by Tk0.50 and export proceeds by Tk1, Md Afzal Karim, chairman of Bafeda and managing director and CEO of Sonali Bank, told The Business Standard.

Earlier, on 31 July this year the dollar rates for export proceeds and remittance were set at Tk108.50 and Tk109, respectively.

The new rate will be implemented from 3 September, said Bafeda officials.

Afzal Karim said, "In the meeting we asked all banks to follow the rate fixed by Bafeda and ABB. Every bank gave consent to abide by the new rate."

According to the decision taken in yesterday's meeting, banks will sell dollars at Tk110 for import settlement, increased from Tk109.50.

A senior bank official who attended the meeting said at the beginning of the meeting, the Chief Economist of the Central Bank Habibur Rahman presented a paper titled "Equilibrium and misalignment of exchange rate".

Habibur Rahman said an import dependent country like Bangladesh may benefit from currency overvaluation to fight imported inflation, which is price increase due to an increase in costs of imported products, said sources.

Citing a senior official of the central bank, discussants at the meeting said remittance inflow to the country dropped in August compared to the previous months as some banks had been paying a higher dollar price than the fixed rate. If all banks had followed the fixed dollar rate for remittances, it would have crossed $2 billion in August.

According to the central bank data, Bangladesh received $1.32 billion in remittances through banking channels in the first 25 days of August this year.

In July, remittance receipts stood at $1.97 billion. 

Remittances totalled $21.61 billion in FY23, up by 2.75% over the previous fiscal year.

Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association, expressed appreciation for the higher dollar rate for export proceeds.

He said the dollar rate of export proceeds and remittances should be the same. It was different for almost a year. Exporters will now get some relief with respect to the dollar price as the rates for both the export proceeds and remittances have become equal.

Asked if the export proceeds have been coming to the country smoothly, he said, "Many export payments are delayed by six to nine months. Many of our buyers defer payments. We are trying to quicken the process, but buyers cannot be forced in these cases."

It is worth noting that on 12 September last year, the dollar price for remittances was set at Tk108, while it was Tk99 for exporters. Since then, Bafeda and ABB have increased the dollar price for exporters 13 times and changed the exchange rate for remittances seven times.