Bid to boost remittance inflow: BB advised banks to offer higher dollar rate against expatriate income
Staff Reporter :
The Bangladesh Bank unofficially advised some banks to buy dollars (sent by expatriates) at a higher rate as the downward trend of remittance inflows continue to put stress on the country’s forex reserve.
Bangladesh Bank’s latest data shows, $781.23 in remittance have been received thus far in the first 13 days of October and the final figure for September was recorded at $1.34 billion in inward remittances, marking a 41-month low.
Earlier in August, $1.59 billion remittance came through the banking channel.
It was $1.97 billion in July, the first month of the current financial year of 2023-24.
However, the country needs more to achieve Bangladesh Bank’s monthly goal of $2 billion dollars in remittances.
According to the commercial banks officials, at the beginning of the current month the central bank informally suggested the top officials of various commercial banks to bring in more expatriate by offering higher dollar rate from that announced rate of Tk110 per USD.
After that, some banks brought expatriate income at a rate higher than Tk 114.
Then the BB changed the advice and said maximum Tk 2.5 per USD can be offered.
Currently, about a dozen of commercial banks are offering a maximum rate of Tk 112.5 per dollar of expatriate income.
On 25 September this year, the Bangladesh Foreign Exchange Dealers’ Association (Bafeda) and the Association of Bankers’ Bangladesh (ABB) increased the dollar rate by Tk0.50 to Tk110 for expartiate income.
However, several top officials of the two banks who received instructions from the central bank said that the BB has fined the officials of various banks for buying dollars at higher prices, now they are again advising to buy dollars at higher rate than the officially settled rate which is an example of a double standard policy by the central bank.
In this regard, Bangladesh Bank Executive Director and spokesperson Mezbaul Haque said “I am not aware of any such instructions.”
“Earlier, the central bank fined treasury heads of 10 banks Tk 100,000 each for selling dollars at higher prices in this October.
I don’t know anything more than that”, he added.
A central bank official wishing not to be named said that the current dollar-crisis is depleting reserves.
Due to this, BB has no alternative to increasing the supply of dollars and meeting the import payments of essential commodities.
This opportunity has been given for a temporary basis to minimize the current shortage of US dollar.
He also predicts banks will increase the official rate of the dollar a little more in the near future.
Meanwhile, Bangladesh Bank’s foreign currency reserves are not stabilizing, despite several measures, including import controls.
The foreign currency reserves are decreasing by $1 billion on an average in every month.
According to the IMF’s calculations, the reserves are currently within the $20 billion range, a reliable source from the bank suggests that the actual reserve is less than $17 billion.
In contrast, reserve stood at $48 billion at the end of August, 2021.
