Short supply pushes $ price abnormally up in kerb market

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Siddique Islam
The buying rate of US dollar in the informal market, popularly known as kerb market, was higher by over Tk 4.0 Wednesday than what was offered by state-owned banks.
"The exchange rate of US dollar has increased gradually in the kerb market due mainly to short supply," a currency trader told the FE, adding that the US dollar rate might rise further to meet the growing demand for the greenback in the informal market.
But bankers have expressed their concern over the impact of the huge gap in dollar rates in the kerb and formal markets on the remittance inflow through official channels.
"The inflow of remittances through the banking channel may be affected if the upward trend in greenback rates continues in the informal market," a senior treasury official of a private commercial bank told the FE.
The bankers, however, urged the authorities concerned to take necessary actions immediately to check the hike of US dollar in the kerb market.
They also advised travellers to buy greenback from banks as it is not only cheaper but its supply is also adequate there.
Market insiders said the supply of cash dollar in the informal market has been affected because of tight vigilance by the authorities concerned, particularly at the airport, although the demand for greenback has remained unchanged.
Besides, the tough anti-money laundering act has been discouraging the expatriate Bangladeshis from sending their hard-earned money through illegal 'hundi' channel.
The price of US dollar normally increases in the kerb markets when substantial illegal transactions like smuggling and under invoicing take place, they added.
The central bank is closely monitoring the market situation but it cannot intervene directly into the unauthorised market.
"We're informed about the higher rates of the greenback in the informal market," a senior official of the Bangladesh Bank (BB) told the FE, adding that the central bank is closely watching the situation.
The greenback was sold between Tk 73.50 and Tk 73.60 in the informal market Wednesday while the buying rates were between Tk 73.00 and Tk 73.10.
While in the formal market, five state-owned banks were selling the greenback at Tk 69.50 and buying at Tk 68.50, a treasury official of a state-owned bank told the FE, adding that most of the private and foreign commercial banks offer higher rates of the greenback then that of the state-owned banks.
"We're also offering higher rates only for inward remittances to discourage the expatriate Bangladeshis from sending their money using the illegal 'hundi' channel," he noted.
The exchange rate of the greenback, however, remained stable in the inter-bank foreign exchange market hovering between Tk 69.3400 and Tk 69.3450 on the day.