Taka devalued further, LC rate shoots to Tk112 a dollar

A chunk of import payment from banks worsened the dollar crisis on Monday, prompting the Bangladesh Bank to devalue taka by 30 paisa, setting the new interbank exchange rate at Tk95 for the day.

The dollar price for opening import LC (Letter of Credit) surged to a new high of Tk112 on Monday from Tk110 when the kerb market rate surged to Tk115 from Tk111.

The Bangladesh Bank made import payments of $47 million to foreign buyers on behalf of commercial banks which dried up the forex market on the day, said industry insiders.

The Bangladesh Bank also moved for stern action against five private commercial banks and one foreign bank by ordering the banks to remove their treasury heads for their alleged involvement in irregularities in dollar sales, said Serajul Islam, the central bank spokesperson.

The central bank took the action based on its inspection report on dollar selling by banks, according to a Bangladesh Bank source.

The dollar crisis intensified just four days after the Bangladesh Bank governor expressed hope of a cooling dollar rate in two to three months.

On 4 August, Bangladesh Bank Governor Abdur Rouf Talukder said dollar prices will stabilise in two or three months as the gap between inflows and outflows has narrowed amid sliding imports, rising remittance inflows and improving exports.

Dollar crisis: BB orders removal of 6 banks’ treasury chiefs 

The Bangladesh Bank will go for a floating exchange rate when the country overcomes the dollar crisis, he said in a views-exchange meeting with journalists at the central bank headquarters.

The dollar price remained in an upward trajectory even after the country received a 14-month high remittance of $2 billion in July when export growth was 37% year-on-year in the month.

Despite having good inflow, the dollar crisis has been worsening every day as some banks were found involved in unhealthy competition in dollar selling.

Some banks have good inflow of remittances and export earnings while most of the banks are facing a dollar shortage. 

As a result, banks with a good position of foreign currency sell dollars at higher prices, said a senior executive of the Bangladesh Bank. 

Moreover, though LC opening slowed down in the last two months, banks are still under payment pressure of previous LCs, he said. 

Meanwhile, Bangladesh Bank reduced the taka by 30 paisa against the US dollar. 

On Monday, the price was fixed at Tk95 per dollar, while on Sunday it was Tk94.70. 

Confirming the increase in the price of the dollar, spokesperson of the central bank Sirajul Islam said the demand for the dollar has increased amid fears of a shortage and trade deficit in the country's market. 

Accordingly, the inter market rate is also increasing. 

It is known that on Monday, the state-owned Agrani Bank asked for $70-80 million from the Bangladesh Bank, but the central bank gave it $30 million.

Meanwhile, with the increase in the price of the dollar in the inter market, the price of the dollar is also increasing in the spot market.

On Monday, open market sellers sold the dollar at Tk115. 

In this regard, Motijheel dollar seller Nadir Hossain said the supply of dollars in the market is very low but the demand was high. Also, due to regular monitoring by the central bank, many sellers are out of the market. 

Most traders are observing the market without selling dollars.

A money changer, who did not want to be named, said, "I had around 12,000 dollars in my hand in the morning. I sold them at the rate of Tk112.70. In a span of a few hours, the price went up by around Tk3. Now I can't buy dollars even at a rate of more than Tk115."

At the beginning of January this year, the central bank raised the interbank exchange rate of the dollar by 20 paisa to Tk86. The taka has only weakened against the dollar since then. 

The price of the dollar increased by Tk8.80 at the end of six months till yesterday.

The central bank sold $7.7 billion in the 2021-22 fiscal year. 

The country's foreign exchange reserves stood at $39.66 billion in August due to continued dollar selling while it was $48 billion in August 2021.