BB allows floating exchange rate of US dollar amid pressure

Bangladesh Bank on Thursday withdrew the fixed exchange rate of US dollar for banks allowing the market to decide the rate based on demand and supply.

The central bank on Thursday backtracked on its earlier decision after the remittance from expatriates marked a fall and exporters failed to convert their bills since the bank set a single exchange rate of a dollar at Tk 89 on Sunday.

The BB informed banks the latest decision by giving some regulatory instructions. As a result, banks can set their (banks) own dollar price in line with the market demand.

The BB directive said that expatriate income (remittance) and import bill will be exchanged at a competitive market price of dollars. Besides, export income will be encashed at market price of dollar. Banks will sell dollars at a slightly higher price than they buy it.

As the dollar price of expatriate income is fixed at the market price, the dollar price will also be fixed at the import. Besides, export income will be monetised at market price. Banks will buy and sell dollars at a slightly higher price.

Md Serajul Islam, executive director and spokesperson of BB, told UNB that the central bank allowed banks to fix dollar pricing in consequence of market demand from Thursday.

Explaining why the decision was made, he said, “Banks have said that those who are sending remittances do not think the dollar rate is right. Therefore, banks will set the dollar rate depending on the competitive market.”

But the BB instructed banks they cannot make any abrupt raise in dollar price,” Serajul said.

At the same time banks were instructed to keep watch on the money exchange houses so that they cannot raise dollar prices at unusual levels.