The Bangladesh Foreign Exchange Dealers Association (BAFEDA) and Association of Bankers Bangladesh (ABB) have increased the exchange rate of the US dollar for repatriated export income by Tk 0.5, bringing it to Tk 107.5 per dollar. This decision was made during a meeting held on Monday, where top bank executives involved in foreign exchange transactions gathered. Since September 2022, a joint committee comprising BAFEDA and ABB has been responsible for determining the exchange rate between the taka and the US dollar, which is the world’s reserve currency. Although the intention was to establish a floating exchange rate, the system has not operated as planned.
Economists have criticized the existence of multiple exchange rates and have advocated for a single, unified exchange rate. However, the BAFEDA-ABB committee has yet to address this demand. Following the recent announcement, exporters will receive Tk 107.5 in local currency for each dollar earned through exports. In contrast, the exchange rate for expatriate income (remittances) remains unchanged at Tk 108.5. Additionally, the maximum interbank rate will continue to be Tk 109 per US dollar.
The country has been facing a dollar crisis since March of the previous year, primarily triggered by the Russia-Ukraine conflict. In an attempt to tackle the crisis, Bangladesh Bank initially fixed the exchange rate. However, this approach exacerbated the situation. In September of last year, Bangladesh Bank officially relinquished its responsibility for determining the exchange rate, transferring it to ABB and BAFEDA in consultation with the central bank. Since then, these two organizations have been collaboratively determining the dollar price for export and repatriation income, as well as import liabilities. Essentially, they are implementing decisions made by Bangladesh Bank.
The adjustment in the exchange rate for repatriated export income reflects ongoing efforts to address the dollar crisis in Bangladesh. The decision made by BAFEDA and ABB will impact exporters, who will now receive Tk 107.5 for each dollar earned through exports. While the move towards a floating exchange rate has encountered challenges, economists continue to advocate for a single, unified exchange rate to promote stability and transparency in foreign exchange transactions. The joint committee comprising BAFEDA and ABB plays a pivotal role in determining the exchange rate, working closely with Bangladesh Bank to address the complex dynamics of the country’s foreign exchange market.
