US dollar price now jumps over Tk 100 mark for the first time in Bangladesh, prompting the central bank to begin a probe into the unusual exchange-rate hike.
A brigade of 12 inspection teams of Bangladesh Bank started on-site inspections into alleged 'distortion' to foreign-exchange rate by some banks, according to officials.
Rate distortion means banks charge higher price of the US currency bypassing their announced rates particularly for BC (bills for collection) selling and TT (Telegraphic Transfer) clean, they explained.
Besides, the probe teams are scrutinizing as to whether import items have been received properly or not after settling import-payment obligations with the forex.
The investigators have been assigned to check the allegations of importers about charging higher price of the greenback ignoring the official rates, particularly for import payments, they said.
At least 20 banks, including four state-owned commercial banks, have been included in the list for the inspection, according to the officials.
They also said the central bank would take next course of action against the banks after receiving the inspection reports.
When contacted, a senior BB official told the FE that it's a routine inspection, conducted by the department concerned of the central bank to examine irregularities relating to the foreign exchange.
"We've been assigned to look into the treasury functions of the banks concerned along with other issues relating to the foreign exchange," a probe-team member told the FE, without elaborating.
The latest regulatory move came against the backdrop of allegations that some banks are offering higher rates of the greenback to their customers for settling import-payment obligations as well as purchasing export proceeds.
The US dollar was quoted at maximum of Tk 87.60 each for the sale of bills for collection, generally known as BC, on the day--unchanged from the previous level.
Some banks, however, traded the US currency ranging between Tk 95 and Tk 96 for settling import-payment obligations of their customers, according to the operators.
On the other hand, the banks quoted dollar at Tk 86.60 on the day--unchanged from the previous working day--to remitters for TT of their funds.
Some banks which are handling lower export business offer higher rates to exporters for purchasing export proceeds, they added.
In some cases, the banks quoted the US dollar between Tk 92 and Tk 93 for purchasing export proceeds instead of Tk 86.70.
However, the central bank is providing the foreign-currency liquidity support to the banks continuously on a priority basis to settle their import-payment obligations.
As part of the remedial move, the BB sold $96 million directly to five scheduled banks on Tuesday to help in settling import payments.
The central bank has so far sold $5.31 billion from the reserves directly to the commercial banks as liquidity support for settling their import-payment obligations in the current fiscal year (FY), 2021-22.
Bangladesh's market witnessed a volatile situation mainly due to higher outflow of foreign exchange following 'hefty growth' in import payments compared to the inflow in the last few months.
The operators, however, say lower remittance inflow also pushed up pressure on the country's foreign-exchange coffers recently.
The flow of inward remittances dropped more than 16 per cent to $17.31 billion during the July-April period of the FY '22 from $20.66 billion in the same period of the previous fiscal.
Meanwhile, exchange rate of cash dollar against the local currency on the open market, known as kerb market, crossed Tk 100 mark on Tuesday mainly due to lower supply of the greenback.
The US currency rate reached Tk 102 each on the day from Tk 96 of the previous day, currency traders said.
"We sold the cash US dollar at maximum Tk 102 each from 12pm to 3:00pm on Tuesday to meet higher demand for the greenback," a senior trader told the FE.
He also said the rate of cash US dollar came to Tk 100 at closing period on the same day from Tk 102 earlier.
"The demand-supply mismatch of the US dollar on the market is the main cause behind the rising trend in cash dollar rates," the trader explains.
He also says cash dollar is mainly used for medical treatment, education and business purposes.
"Tourists also buy cash dollar in an increased amount ahead of the long vacations like Eid etc," the trader notes.
Sources, however, said the rate of cash US dollar normally increases when illegal transactions like smuggling and under-invoicing go up.
Some senior bankers feared that the country's remittance inflow through formal channel may be affected in the near future if the ongoing upward trend in cash US dollar exchange rate continues.
"The inward remittance flow may switch to informal channels from official ones if the gap continues over a longer term," a senior official of a leading private commercial bank (PCB) told the FE.
He also urged the policymakers for taking effective measures to minimise the gap between the two rates for maintaining the existing trend in inward remittance in the coming months.
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