After over a year, foreign-currency dealers and bankers in Bangladesh reduced the raised exchange rate of the US dollar by Tk 0.50 across the board--for remittances, export proceeds and import payments.
This decision on a reverse course in the taka-dollar exchange comes following a meeting between the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) and the Association of Bankers Bangladesh (ABB) held on Wednesday that did the stocktaking of the country's foreign-exchange situation and overall economic needs of the hour.
According to meeting sources, the downward adjustment of the exchange rate will be effective from today (Thursday).
As per the latest decision, exporters and remitters will now receive Tk 110 per dollar, down from the existing rate of Tk 110.50. Importers will now need to pay little lower, Tk 110.50, to purchase an American greenback from banks, compared to the previous rate of Tk 111.
01Contacted for his views about impacts of the step, ABB Chairman Selim R.F. Hussain said the decision to cut down the rate came after consideration of overall macroeconomic situation as imports plummeted significantly over the last one year because of government's belt-tightening move.
The austerity measure amid forex crunch cast its fallout on production and consumption both through fall in capital-goods import and price rises for short supply and inflation.
"Look at the current-account position, which is in the positive territory now, while all over-dues with the foreign correspondent banks have been cleared," he says to indicate some pickup on the financial from.
At the same time, NOP (net open position) of almost all the banks improved in recent times because of growing dollar cash-holding position of the banks.
"So, through the downward adjustment in exchange rate, we want to give a positive signal to the market," says the experienced banker.
Responding to a question, Mr Hussain, also top executive of BRAC Bank, said remittance is an important part of their funding but there are other key areas as well.
"Yes, we need remittance but we don't want to offer indiscriminate rate for it," he added.
Talking about impacts of the rate cut on remittance and exports, Dr M. Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said the fall in exchange rate probably comes because of the improvement in current-account position.
"The downward adjustment is an indication that the market scenario is playing some role in influencing the exchange rate, which is a good thing."
Regarding the remittance inflow, the economist notes that the drop in the rate is very insignificant--not a big determinant to attract remittance.
"What is more important to allure remitters is the stability in the price associated in confidence and the reduction in the speculative behaviour of the market," he said.
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