Economy
Banks sell $16m at Tk106 interbank rate
Banks transacted $16 million among themselves at Tk106 per dollar on Tuesday, the second day since the interbank forex market resumed after five months with banks agreeing on uniform rates for exporters and remitters.
The interbank rate was Tk103.50 a day prior.
On Tuesday, banks encashed remittance and export proceeds at the rate set by the Bangladesh Foreign Exchange Dealers Association (Bafeda).
Of the sales, the highest of $2 million was sold by City Bank, Bangladesh Development Bank and Eastern Bank.
Mashrur Arefin, vice chairman of the Association of Bankers, Bangladesh (ABB) and also MD of City Bank, told, “I am happy that we sold $2 million in the interbank market today. Two smaller banks needed dollars badly. We sold them at Tk105 rate. My buying cost was higher than that, but I don’t actually look at profit and loss.
“I basically take a view of the market – whether the dollar will go below Tk105. The underlying assumption is that an active interbank market will essentially diminish the cost of remittance dollars.”
Last Sunday, Bafeda and the ABB decided that the dollar price will be determined by calculating the average price of foreign exchange and export earnings in five working days. All banks will encash export proceeds and collect remittances at the same rate.
Last Sunday, the maximum remittance collection rate was Tk108. Bafeda set a maximum of Tk99 per dollar to encash export income.
However, banks will settle import Letter of Credit (LC), using a weighted average buying cost at a maximum rate of one taka higher.
The leaders of the organization said the rate will change after a few days.
Treasury officials, however, said not all banks are profiting Tk1 per dollar, with some adding a maximum of Tk0.30-0.50.
According to that, yesterday the banks were settling LCs at a maximum of Tk108.50 and minimum of Tk105.
They said banks had agreements with some exchange houses which meant remittance dollars were received from those at a slightly lower rate.
No bank, however, has charged a rate higher than Tk108.
In case of export proceeds, exporters have received the rate of Tk99 fixed by Bafeda against the dollar.
Besides, exchange houses have been given a maximum of Tk108 per dollar for remittances.
Selim RF Hussain, ABB chairman and managing director of Brac Bank, said due to the decision taken by ABB and Bafeda, some comfort was returning to the market.
He, however, said it would still take time.
“We have introduced these rates in close coordination with the Bangladesh Bank. Our main objective is to bring stability to the market. It will probably happen in a few days.”
Although banks followed the interbank rate, the Bangladesh Bank’s rate remained the same. On Tuesday, the central bank sold dollars at Tk96, after it increased the price by Tk1 on Monday.
Central bank spokesperson Serajul Islam said $45 million dollars were sold yesterday at a rate of Tk96 for government imports and imports of daily essentials.
He said now the banks’ dollar rate will be uploaded on the central bank’s website, but the central bank’s rate would not be available there for now.
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.
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