Economy
Currency Exchange Woes: US Dollar Price Surges in Bangladesh’s Kerb Market
Public reliance on the open market for acquiring US dollars has surged, with the exchange rate reaching Tk 120-121 per dollar. The dollar crisis in the informal market has worsened following raids by Bangladesh Bank and law enforcement on money changers, alleging higher exchange rates.
In this challenging scenario, several individuals are now facilitating dollar transactions through their networks, offering the currency at Tk 120-121 per dollar. They have become the primary source of dollars for those requiring funds for medical treatment, education, and emergencies abroad, according to sources.
Jamal (a pseudonym), the proprietor of a money exchange establishment in Dhaka’s Motijheel area, expressed that they are unable to purchase a dollar even at Tk 115. He questioned how they could possibly sell a dollar at Tk 113.30.
Numerous other money changers and independent dollar traders are inactive due to the currency supply crisis. In just one month, the US dollar’s exchange rate in the open market has surged from Tk 112 to Tk 120-121 per dollar, despite recent actions by the central bank and law enforcement to enforce the previous rate of Tk 113.30 per dollar.
Insiders in the market have pointed to a severe shortage of US dollars in Bangladesh. The foreign currency’s price is soaring uncontrollably, leading to a depreciation of the Taka. Consequently, the dollar’s price in the open market has exceeded Tk 120.
Interviews with various exchange houses and individuals engaged in dollar trading have revealed that most money changers are grappling with a lack of dollars. Sheikh Helal Sikder, the Secretary-General of the Money Changers Association of Bangladesh, stated that Bangladesh Bank has specified the dollar price for money changers, with a buying rate of Tk 111.80 and a selling rate of Tk 113.30. However, Sikder emphasized that no one is able to obtain dollars at this specified price, leaving money changers empty-handed.
In response to inquiries regarding the dollar scarcity in the open market, Bangladesh Bank’s Executive Director and spokesperson, Mesbaul Hoque, acknowledged that dollars are being traded, but not everyone is willing to sell them.
During the eleventh month of the current fiscal year, the country’s foreign currency reserves have fallen below $19 billion for the first time. After paying off some import bills, the reserves have now stood at $18.26 billion on Sunday.
According to the International Monetary Fund (IMF), as of May 8, the total foreign currency reserves of the country were $19.82 billion.
Mohammad Mezbauul Haque, the spokesperson of Bangladesh Bank, informed that through the Asian Clearing Union (ACU), the central bank has paid off import bills totaling $1.63 billion over the past two months.
However, Bangladesh Bank maintains that after paying off the import bills, the foreign currency reserves now stand at $23.71 billion.
According to the Central Bank’s accounts, the reserves were $25.27 billion on May 8.
The Dhaka Stock Exchange (DSE) and the DSE Brokers Association (DBA) have expressed gratitude towards Prime Minister Sheikh Hasina for her directive to list government companies in the capital market, a move hailed as timely and positive.
The directive was issued during the recent meeting of the Executive Committee of the National Economic Council (Ecnec) last Thursday.
Dr. Hafiz Muhammad Hasan Babu, Chairman of DSE, described the directive as a significant step towards enhancing the dynamics of the capital market. He emphasized that besides invigorating the capital market, this move would also attract foreign investment and promote sustainable development.
Despite previous efforts, government institutions had not been listed in the stock exchange, according to a notification issued by the DSE. The Prime Minister’s directive is seen as a pivotal step towards revitalizing and expanding the economy.
Dr. Babu further remarked, “The listing of reputable companies in the capital market, as directed by the Prime Minister, will greatly benefit the country’s economy. It will also enhance investor confidence.”
Similarly, the DBA released a notification applauding the Prime Minister’s directive, terming it as positive and timely for the capital market.
Saiful Islam, President of DBA, expressed optimism about the directive’s potential to accelerate the country’s capital market and overall economy. He pledged support to relevant government departments and regulatory bodies in implementing the directive, ensuring its positive impact on the economy, including the capital market.
India has expressed interest in financing Bangladesh’s Teesta project, announced Foreign Minister Hasan Mahmud. Speaking to reporters after a meeting with Indian Foreign Secretary Vinay Mohan Kwatra, Mahmud stressed the importance of aligning the project with Bangladesh’s needs. He confirmed discussions on the Teesta issue during the meeting. Mahmud also affirmed Prime Minister Sheikh Hasina’s upcoming visit to New Delhi, indicating that the finalization of the date would depend on the formation of the new Indian government following ongoing elections.
Meanwhile, the IMF has approved a $1.15 billion staff-level loan for Bangladesh in its third tranche. Mahmud noted the ongoing elections in India and the subsequent formation of the new government as factors influencing the scheduling of PM Hasina’s visit.
When asked about the sequence of visits to India and China, Mahmud suggested Delhi’s geographical proximity to Bangladesh. Diplomatic sources suggest PM Hasina’s visit to India is planned for early July, following India’s elections.
Pre-election surveys indicate strong prospects for Indian Prime Minister Narendra Modi’s re-election. Modi previously congratulated PM Hasina on her electoral victory in January, expressing optimism about strengthening ties between the two nations.
The last bilateral engagement between the prime ministers occurred during the G-20 Leaders Summit in September 2023. Modi is expected to invite South Asian and BIMSTEC leaders to his swearing-in ceremony, fostering regional cooperation.
Addressing border killings, Mahmud emphasized the government’s commitment to ending such incidents and promoting the use of non-lethal weapons by border forces. Discussions also covered enhancing physical and people-to-people connectivity, including cooperation with India to import hydropower from Nepal and Bhutan through India. Mahmud highlighted the need to further ease visa restrictions to strengthen people-to-people relations.
