Inter-bank exchange rate hits all-time high of Tk108

The inter-bank dollar price has now reached an all-time high of Tk 108 after the Bangladesh Bank decided to implement the floating exchange rate, according to the central bank website.

The lowest rate on Tuesday was Tk 99.65 while the average exchange rate was Tk 103.825.

Importers are facing difficulties with the rapidly increasing dollar price. They say this is increasing their import costs which are ultimately hiking the price of goods.

However, the country is already facing the high inflation. This increasing exchange rate will create more inflationary pressure, said experts.

Mostofa Azad Chowdhury Babu, Senior Vice President of FBCCI, told The Business Post, “Importers are in trouble. They have to buy products at higher prices due to high price of dollar. On the other hand, the pressure of inflation is making it difficult for them to sell products at higher prices in market.”

Mentioning that it would be good if we can reduce our dollar dependence, he said, “Bangladesh Bank has recently made it easier to open LC with China in Yuan. This is a good initiative.”

Babu said an Indian bank has offered to open an LC in rupee. If Bangladesh Bank allows transactions in rupees like yuan, then dollar dependence will be slightly reduced. Country’s import payment was $83.68 billion in last financial year which was a massive 46 per cent jump from the previous fiscal year. It happened due to price increase in world market triggered by the ongoing Russia-Ukraine war. Besides, Bangladesh’s domestic demand increased after the ease of pandemic.

As a result, as the demand for dollars increased resulting in the hike in exchange rate. The dollar price has increased by 25.58 per cent since last March to Tuesday. Bangladesh Bank has recently executed the floating rate to stabilise the dollar market.

Now, authorised dealer banks (ADs) can decide the exchange rate as per the market demand, subject to the approval of Bangladesh Bank. This decision was taken in a meeting of Bangladesh Foreign Exchange Dealers Association (BAFEDA) on September 14.

Bangladesh Bank embraced a floating exchange rate of the taka against the USD in 2012. But in reality, it used to instruct banks, from time to time, to follow certain rates while settling import bills and purchasing dollars from exporters.