Treasury heads set maximum dollar rate at Tk120
Treasury heads of most banks in the country have decided that from now on no bank will be allowed to charge more than Tk120 for buying and selling per dollar. The heads of treasury departments of 47 banks made the decision at a meeting in Dhaka. They decided to impose the limit due to the recent rise in dollar prices for remittances and interbank transactions, which has been occurring without any significant reason.
In the meeting, the treasury heads made several decisions through discussions. They announced that banks will quote a maximum rate of Tk120 for remittance dollars and the rate will also apply to interbank and import payment settlements. Banks will follow the Bangladesh Bank's circular for the encashment of export proceeds.
Besides, the treasury heads will meet once or twice a week to monitor the implementation of the above decisions and share views on market conditions.
"A monitoring committee will be formed later to monitor the market rate movement, escalate deviation, if any and also to coordinate among banks for the development of an effective forex market," a treasury head who attended the meeting told TBS.
Earlier, Bangladesh Bank Governor Ahsan H Mansur had stated that banks could buy and sell dollars by adding a 2.5% band to the mid-rate of Tk117, as per the crawling peg exchange rate mechanism. Accordingly, banks were allowed to charge up to Tk120 for dollar transactions.
Association of Bankers Bangladesh Limited (ABB) Chairman and BRAC Bank Managing Director and CEO Selim RF Hussain told The Business Standard, "Currently, the demand for dollars in the private sector has decreased. We should now focus on clearing the overdue payments for government import expenses. It is hoped that these payments will be cleared within the next 4-5 months. If the treasury heads can maintain the dollar rate within Tk120, it would be beneficial for the banking sector."
According to several senior officials from various banks, to attract more remittances, banks had offered foreign exchange houses rates of up to Tk121.50 until last Wednesday. As a result, these banks received more remittances compared to others in August. Additionally, they sold these dollars to importers at rates of up to Tk122. However, according to the current market conditions, such high rates are not justified, they say.
In interbank transactions, for the past week or so, one bank has been selling dollars to another bank at a maximum rate of Tk120.90. On Wednesday, $32.48 million was traded in the interbank market at rates between Tk120 and Tk120.50.
A senior official from the central bank said they had requested several treasury heads to sell $50 million daily to state-owned banks in the interbank market. The dollars were intended for paying overdue amounts of $2 billion for government-imported oil, gas, and fertilisers. However, upon learning of the demand, many banks began charging higher rates for dollars in the interbank market.
The treasury head of a leading bank said the dollar price would not have increased so much if some banks had not engaged in unhealthy competition to obtain more remittance dollars. He noted that if all banks adhered to the agreed-upon rate, the dollar rate would not have risen abnormally.
The official, referring to the sacrifices made by several hundred students and citizens to eradicate inequality, said if the central bank continues to favour a few banks for the sake of good relations, it will not benefit the banking sector.