BB widens buy-sell spread to Tk 1.50

Siddique Islam | Published: August 17, 2022 23:09:42

Moneychangers can now profit more as the central bank widened the spread between selling and buying rates of cash dollar to Tk 1.50, in a shifting stance for managing the frantic forex market.
The little higher margin was announced Wednesday at a meeting of leaders of the Moneychangers' Association of Bangladesh, held at the Bangladesh Bank (BB) headquarters in Dhaka with BB deputy governor Ahmed Jamal in the chair. A four-member delegation of the association, headed by its president AKM Ismail Haq, attended at the meeting.
The fresh spread for cash dollar came after just three days of directing all the authorized dealer (AD) banks to peg the same to Tk 1.0 at the maximum, as the US currency's exchange rates with the local currency were making quantum leaps on speculative open market to bank on Bangladesh's falling reserves in lockstep with many countries.
On August 14, the central bank asked for a review of the spread between sale and purchase rates of the greenback, limiting the margin to Tk 1.0 to help bring stability in the country's foreign-exchange (forex) market.
"We'll allow maximum profit margin for cash dollar at Tk 1.50 for the moneychangers," BB spokesperson Md Serajul Islam told the FE while replying to a query.
He also said the central bank fixed the maximum margin for the moneychangers to ensure market discipline.
Talking to the FE, another BB official said the moneychangers will have to collect weighted average rate of cash dollar from Bangladesh Foreign Exchange Dealers' Association (BAFEDA) each working day.
"The moneychangers will be allowed to make profit worth maximum Tk 1.50 considering their establishment costs," the central banker explains.
At the meeting, the money sellers assured the central bank of fixing their spread in line with the BB instructions, according to a senior association leader.
"We'll comply with the BB rules and regulations properly," MS Zaman, senior vice president of the association, told the FE after the meeting.
He also said the association also urged the central bank to take legal actions against the unauthorized moneychangers immediately to ensure stability on the market.
Currently, 235 money exchanges are doing business with the permission of the central bank. But there are more than 700 moneychangers freewheeling on the money market. The cash dollar traded at maximum at Tk 109 on the open market, generally known as kerb market, in the capital on Monday evening due mainly to short supply of the greenback in hot demand.
The banks quoted maximum Tk 95.05 for the sale of bills for collection, generally known as BC, to their customers for settling import payments on Sunday--unchanged from the previous level.
Some banks, however, traded the greenback at rates ranging between Tk 95.05 and Tk 106 for settling the import-payment obligations, ignoring their announced rates, according to market operators.
On the other hand, the banks also quoted the dollar maximum at Tk 94.05 on the day to remitters as well as realised export proceeds or TT clean unchanged from the previous working day.
But some banks collected the export proceeds offering maximum Tk 103 instead of Tk 94.05 the same day to meet their growing demand for the greenback.
Meanwhile, the central bank continues to provide its foreign-currency support to scheduled banks for managing the forex-market volatility.
As part of the moves, the BB sold $40 million more directly to three commercial banks on Wednesday to help them meet a growing demand for the greenback--as global price rises have led to import-cost escalation with its resultant pressures on reserves of Bangladesh, as also of many other countries.
Earlier on Tuesday, the central bank sold $80 million to different banks on the same grounds.
The central bank has so far injected $1.84 billion from the reserves directly into commercial banks as liquidity support for import payments in the current fiscal year (FY), 2022-23.
In FY'22, the central bank sold $7.62 billion from the reserves to the banks for the same purpose.
Bangladesh's forex reserves came down to $39.53 billion on Wednesday from $39.58 billion of the previous working day following higher sales of dollar to feed the market.
siddique.islam@gmail.com