The central bank is set to meet with bankers of Bangladesh on 14 August 2022, to consult on the way out of the dollar crisis to stabilize the nation’s foreign exchange market. The Bangladesh Bank has requested the Association of Bankers Bangladesh (ABB) and the member banks of the Bangladesh Foreign Exchange Dealers’ Association to hold the meeting at the central bank headquarters, according to sources familiar with the development. The article is about Bangladesh Bank To Meet Bankers to Discuss Dollar Crisis.
Sources said that although the central bank did not say anything clearly about the agenda, bankers feel that the foreign exchange rate and the forex market will be discussed in the meeting. On 8 August, the central bank called for the transfer of the treasury heads of the Prime Bank, BRAC Bank, City Bank, Dutch-Bangla Bank, and Southeast Bank, and the foreign sector Standard Chartered Bank to their human resource departments as a punitive measure for making abnormal profits from dollar trading. Banks are also not very pleased with such a decision of the central bank. Sources said additional profit by selling dollars may be discussed with the banks in the meeting.
As per the banker’s statement, there are no guidelines from the central bank on how a bank can profit from purchasing and selling dollars. However, believing there is no profit limit directive, a senior central bank official said that according to the Bangladesh Bank guidelines, banks must obey the BC (bills for collection) selling rate for import LCs (letters of credit). The BC selling rate is typically 5-10 paisa higher than the central bank’s interbank exchange rate. Usually, banks make a profit of 10-20 paisa per dollar on LC settlements. At present, many banks have made a profit of Tk5-7 per dollar.
Banks claimed they have to buy dollars from exchange houses by paying at least Tk. 12-15 more than the BC selling rate. Sometimes the dollar cannot be bought even at Tk. 107-108. Therefore, if they sell dollars at the BC selling rate, they will have to incur a huge loss.
In such a situation, the central bank pretends not to see everything. A senior official at the central bank told TBS that the interbank exchange rate is not being set according to the volatile dollar market. As a result, banks are forced to transact at higher prices. The central bank knows everything. This official commented that following all the rules in this crisis is challenging.
To read more Financial news, Please Click Here!