The worrying surge in dollar price in the kerb market

Economic crisis is getting even more severe. The dollar price surged to as much as Tk 127 in the kerb market on Thursday as the demand far outpaced its supply in the money exchange houses. The rate of the US dollar was around Tk 122 in the informal market until November 8.

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 some banks were offering as much as Tk 124 for a greenback to encourage remitters to use formal channels instead of informal money transfer systems like “hundi”.

Bangladesh Foreign Exchange Dealers’ Association and the Association of Bankers’ Bangladesh on November 8 asked banks not to pay over Tk 115 for every dollar at the time of collecting foreign currencies from the remitters.

There might be a correlation to that but various factors such as a demand spike for payments for smuggling or illegal money transfer abroad might also fuelled exchange rates in the kerb market. The dollar market has heated up.

The cost of each greenback was below Tk 120 early this month and it crossed Tk 120 last Sunday. Stockpiling of the US dollar by banks and big companies has caused the rate of the American greenback to go so high.

This development takes place at a time when Bangladesh’s foreign exchange market becomes volatile in the face of the shortage of dollars as its requirement for external payment overshoots the overall inflow from remittances and exports.

In the July-October period of this year, Bangladesh’s export growth decelerated to 3.5 per cent when the inflow of remittance, another major source of foreign currency, declined by 4.3 per cent year-on-year.

The country, which recorded over $48 billion in foreign currency reserves on August 24, 2021, saw it losing $28 billion since then.

The foreign exchange reserve as per the balance of payment manual of the International Monetary Fund was $20.7 billion on November 8.

The taka lost nearly 30 per cent in value to the greenback over the last two years.

The macroeconomic indicators and balance of payment are not in good shape and worsening day by day because of the regime’s wrong economic policies, capital flights, and others. Without political settlements, it is hard to fix the economic loopholes of the economy.