USD rate set at Tk100 for export encashment

Banks have re-fixed the rate for export encashment to Tk 100 per US dollar with the aim to mitigate the dollar crisis in the banking sector.

They have also decided not to impose any charge on remitters at their exchange houses abroad and keep the houses open during holidays.

Under the new rates, exporters will get Tk 100 per US dollar from Monday, compared to Tk 99.50 on Sunday. The rate for remittance collection will remain unchanged — Tk 107 per dollar.

The decisions were taken at a meeting between the Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) and the Association of Bankers, Bangladesh (ABB) at Sonali Bank’s head office in Dhaka on Sunday night.

BAFEDA Chairman Md Afzal Karim announced the new rate at a media briefing after the meeting.

Importers will have to buy US dollars based on the weighted average exchange rate plus Tk 1. The average rate will be decided based on the rates paid to exporters and exchange houses.

On September 11, the two associations fixed a uniform exchange rate for USD to curb the instability in the foreign exchange market, setting a maximum of Tk 108 for foreign exchange houses to collect remittance and Tk 99 for encashment of export bills.

However, they lowered the rates for remittance collection later in two phases. On September 27, the rate was taken down to Tk 107.50 per USD. Effective from October 1, this rate has been another blow to the remittance earnings.

Remittance inflow declined more than 7 per cent year-on-year to $1.52 billion in October, as per Bangladesh Bank’s (BB) data. This was the lowest in eight months.

Before the fixing of the USD rates, different banks used to quote different rates for mobilising remittance from foreign exchange houses. At that time, most of the banks — which had suffered from USD shortages — were offering up to Tk 115 per USD to the exchange house.

BB, meanwhile, has reduced US dollar support to banks from the forex reserve to protect it, which created a further dollar crisis in the banking sector with bankers saying they are facing huge pressure to settle import payments.

Last week, the central bank decided that it will provide US dollar support only to the state-run banks to handle the import payments of government projects.

On Thursday, BB sold only $35 million to the banks and $16 million on Wednesday. However, a few days ago, it was selling over $50 million per day.

At present, the forex reserve stands at $35.73 billion due to BB’s US dollar selling spree. From July 1 to November 3 of this fiscal year, BB sold over $5 billion to banks in a bid to cover their dollar shortage.

Meanwhile, the reserves may drop below $35 billion as the country is set to clear $1.32 billion in payments to the Asian Clearing Union on Monday.

The central bank had injected a record $7.62 billion from its reserve into banks in the last financial year. The country’s forex reserve was at a record $48 billion in August last year.