Connect with us

Economy

Ease for Banks as Trade Rate Drops

Published

on

Dollar

The interbank exchange rate of USD and average dollar buying rates by banks started to decline just a week after the public and private banks took up some special measures in coordination with the central bank.

According to the central bank, banks traded dollars among themselves at a maximum of Tk105.50 on Sunday. The price was at Tk106.75 just the previous day.

Bankers said the crisis in the dollar market had eased up slightly, but they wanted to observe for a few more months to say anything concrete.

On 12 September, banks started charging Tk99 for export proceeds while paying Tk108 for remittances. Besides, they adopted the weighted average for the past five days to determine the dollar rate instead of imposing day-to-day buying and selling rates.

Several sources of the Bangladesh Foreign Exchange Dealers’ Association (Bafeda) and the Association of Bankers, Bangladesh Limited (ABB) said streamlining the interbank dollar exchange had been a remarkable achievement in the last week.

Before the dollar market became unstable, the central bank used to set a dollar rate at which banks would trade the greenback among themselves. Even in the wake of the dollar crunch, the central bank did not update enough the interbank dollar market for the first five months – allowing remittances to remain the key source for banks to procure US dollars.

Foreign exchange dealers and bankers said the interbank exchange has eased up the market pressure to some extent.

According to the Bangladesh Bank, banks traded $16 million on 12 September at Tk106.15. The price rose slightly to Tk106.90 the next day as the trading stood at $35 million.

On 18 September, the dollar stood at Tk105.50, down Tk1.25 from the previous day. The authorities said dollar trading by banks per day also rose in the meantime.

Ahsan H Mansur, executive director of the Policy Research Institute, said allowing multiple rates for US dollars is a wrong decision that cannot last for a long time.

He proposed following the interbank exchange rate as the uniform dollar price. “To encourage the export, exporters could be offered Tk1 less than this rate. At the same time, the central bank should increase the monitoring.”

The differences in dollar buying rates between different banks are decreasing slowly, which the banks celebrate as the second achievement of export proceeds and remittance rate fixing.

Data from the foreign exchange dealers’ association show the average dollar price was at Tk103.43 on 12 September. On that day, banks bought dollars at a minimum of Tk98 to a maximum of Tk110.18. The gap was more than Tk12.

After a week on Monday, the average stood at Tk102.56. The minimum and maximum dollar buying rates by banks were Tk98.65 and Tk107.92 as the gap narrowed to Tk9.

Commenting that it is not possible to comment on the market stability in such a short period of time, Association of Bankers, Bangladesh Limited Chairman Selim RF Hussain said that stability does not necessarily imply higher or lower dollar rates. Rather it means the rate remains stable for a period of time.

“Our market will take time to be stable,” he said.

Share this
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Economy

IMF Urges Bangladesh to Maintain Tight Monetary Policy and Accelerate Reforms

Published

on

The International Monetary Fund (IMF) has urged Bangladesh to maintain a tight monetary policy to contain inflation, while stressing that monetary tightening alone will not be enough to restore economic stability.

Inflation in Bangladesh rose to 8 per cent in September, according to the IMF. The Washington-based lender has called for broader reforms in the financial sector, stronger revenue mobilisation and improvements in overall economic management to address the country’s persistent economic challenges.

Sonali Jain-Chandra, deputy director of the IMF’s Asia and Pacific Department, made the remarks in response to a question at a news conference on the economic outlook for Asia and the Pacific, held on the sidelines of the IMF and World Bank Group annual meetings in Bangkok, Thailand.

Asked whether tight monetary policy alone would be sufficient to tackle inflationary pressures that have persisted for more than three and a half years, Jain-Chandra said maintaining a restrictive monetary stance was important, but needed to be accompanied by other reforms.

Bangladesh is currently facing challenges in three key areas: revenue mobilisation, the financial sector and inflation, she said.

The IMF also expressed concern over the fragile state of Bangladesh’s financial sector, saying a credible reform strategy was needed to strengthen the sector’s capacity and ensure stability.

The fund also highlighted the country’s persistently weak revenue collection. Bangladesh’s tax-to-GDP ratio has declined over time and currently stands at around 7 per cent, placing it among the lowest in the world, according to the IMF.

The IMF stressed the need for a coordinated effort to increase revenue collection, saying higher government revenues were essential to finance development expenditure and strengthen the financial sector.

It called for necessary reforms to the revenue system and effective measures to improve the government’s capacity to generate income.

Talks Under Way on New IMF Programme

Meanwhile, discussions are continuing on a potential new lending programme for Bangladesh.

Jain-Chandra said Bangladeshi authorities approached the IMF in May for support under a new programme after deciding not to draw further instalments under the previous arrangement.

In response to the request, an IMF mission visited Dhaka in July to discuss various aspects of Bangladesh’s economic reform agenda.

According to Jain-Chandra, the reform issues discussed during the visit were closely aligned with the recommendations outlined in the IMF’s Article IV consultation for Bangladesh earlier this year.

The IMF has remained in regular contact with Bangladeshi authorities since the July visit, she said.

Jain-Chandra added that the fund remained closely engaged with the authorities and was ready to support Bangladesh in initiating the reforms needed to address its economic challenges.

Share this
Continue Reading

Economy

IMF Forecasts Slower Growth, Higher Inflation for Bangladesh

Published

on

The International Monetary Fund (IMF) has projected that Bangladesh’s gross domestic product (GDP) will grow by 3.2 per cent in the 2026-27 fiscal year, while average inflation could rise to 10.9 per cent, signalling mounting pressure on the country’s economy.

The projections were outlined in the IMF’s World Economic Outlook (WEO) report, released on Tuesday.

The latest growth forecast marks a significant downward revision from the 4.3 per cent projected by the IMF in April. The fund had subsequently forecast growth of 3.5 per cent in July before lowering its estimate further to 3.2 per cent.

The IMF has also sharply revised its inflation outlook for Bangladesh. In April, it projected average inflation of 6 per cent for the 2026-27 fiscal year. The latest estimate raises that figure to 10.9 per cent.

The combination of slower economic growth and persistently high inflation points to continued pressure on Bangladesh’s macroeconomic stability.

Bangladesh growth outlook trails other forecasts

The IMF’s latest growth projection for Bangladesh is lower than those of other major international development institutions.

The World Bank has forecast GDP growth of 3.4 per cent for Bangladesh in the 2026-27 fiscal year, while the Asian Development Bank (ADB) has projected growth of 4 per cent.

According to the IMF, Bangladesh’s economy grew by 3.6 per cent in the 2025-26 fiscal year, following growth of 3.5 per cent in the preceding fiscal year.

India, Bhutan expected to grow faster

The IMF has projected stronger economic growth in neighbouring countries, with India’s economy expected to expand by 7 per cent and Bhutan’s by 6.9 per cent in the relevant fiscal year.

The contrasting forecasts highlight the challenges facing Bangladesh as it seeks to restore economic momentum while tackling persistent inflation.

The IMF’s latest projections come as the annual meetings of the IMF and the World Bank Group are underway in Bangkok, Thailand.

Bangladesh’s economic situation, reform programmes and efforts to secure financing from development partners are among the key issues receiving attention during the meetings.

Share this
Continue Reading

Economy

World Bank Backs Bangladesh’s Economic Policies, Says Finance Minister

Published

on

The World Bank supports the Bangladesh government’s policies to address the country’s current economic challenges, restore stability and implement medium- and long-term development plans, Finance Minister Amir Khasru Mahmud Chowdhury said on Tuesday.

He said the global lender was broadly aligned with Bangladesh’s economic programmes and policy priorities and would continue to support the country’s economic recovery and future development.

The finance minister made the remarks while speaking to journalists after a meeting with a World Bank managing director in Bangkok, Thailand, on October 13.

Amir Khasru said Bangladesh’s economy was facing significant challenges when the current government took office. Alongside dealing with the financial and economic burdens inherited from the previous period, the country was also having to navigate global economic disruptions caused by ongoing wars and geopolitical tensions.

He said the World Bank understood the realities facing Bangladesh and supported the government’s policy approach to overcoming the economic difficulties.

“The World Bank is aligned with the programmes and policy direction we have set to restore economic stability and ensure future development,” the minister said, adding that both sides would continue working together.

He said the World Bank was willing and prepared to provide the assistance Bangladesh needed.

No decision yet on proposed $10 billion in additional assistance

Clarifying reports that Bangladesh had sought an additional $10 billion in assistance from the World Bank, the finance minister said no final decision had been made.

He said discussions with the lender were ongoing and that possible proposals would be reviewed in light of those discussions. The process could take several months to complete, he added.

“No decision is being made at this stage. I have seen several inaccurate reports here and there. This is a discussion, and there will be follow-up based on these talks. It is a process that will continue over the next few months,” he said.

The minister stressed that the ongoing discussions should not be interpreted as a final agreement. Rather, they were intended to establish a basis for determining the next steps and considering possible decisions.

Further discussions would also take place in Dhaka, he said.

Expressing satisfaction with the progress of the talks, Amir Khasru said Bangladesh was in a favourable position to establish a framework for future cooperation.

He reiterated that the government’s economic policies, programmes and medium- and long-term development plans were broadly aligned with the World Bank’s position.

Government’s economic agenda aligned with BNP manifesto

The finance minister also said the World Bank’s position was consistent with the government’s economic plans and the Bangladesh Nationalist Party’s (BNP) election manifesto.

He said discussions were underway on how to address the country’s economic challenges and achieve the government’s development objectives.

According to the minister, the government has submitted a written proposal outlining a framework for partnership with the World Bank. Discussions on the proposed framework will continue.

He said the World Bank had provided various recommendations and suggestions, while Bangladesh had also presented its own proposals and recommendations.

Further discussions would be based on these submissions, he added.

Government optimistic about inflation and GDP targets

Asked about forecasts by the World Bank and the Asian Development Bank (ADB) on inflation and gross domestic product (GDP) growth, and how they compared with the government’s targets, the finance minister said the government did not intend to dispute the projections made by other institutions.

He said the institutions had prepared their forecasts based on their own calculations and analyses, adding that the country’s economic performance would become clearer as progress on key indicators was assessed over time.

“We do not want to dispute anyone’s projections. They have made their estimates based on their own calculations. We are carrying out our work, and they are doing theirs. What matters most is that the cooperation we need continues,” he said.

The minister expressed optimism that the government would be able to meet the inflation targets set out in the national budget.

He said the government was working to restore economic stability through continued engagement with the World Bank, implementation of its economic policies and progress on medium- and long-term development plans.

Share this
Continue Reading

Recent News

Advertisement

Facebook