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Show-cause notices to banks upset ABB

Forex market volatility

Siddique Islam | December 03, 2018 00:00:00

Top private bankers have urged the central bank to monitor both rates of the US dollar applicable to exporters and importers simultaneously to help stabilise the country's foreign exchange (forex) market.

The leaders of the Association of Bankers, Bangladesh (ABB) have requested the Bangladesh Bank (BB) to call the bank before issuing show-cause notices if found any irregularities in quoting forex rates.

The ABB made the appeal at a meeting held at the central bank headquarters in the capital on Sunday with BB Governor Fazle Kabir in the chair, the meeting participants said.

The appeal from the apex forum of top executives of private commercial banks (PCBs) came after 19 banks were served show-cause notices recently for allegedly providing misleading information about foreign exchange rate, particularly for importers.

A four-member ABB delegation, led by its chairman Syed Mahbubur Rahman, attended the meeting.

"We'll examine the issues," a senior official of the Bangladesh Bank (BB) told the FE while replying to a query about the meeting.

He also said the central bank will act in line with the existing rules and regulations. "We're committed to protecting the interest of the country."

At the meeting, the ABB leaders informed the BB governor that issuing show-cause notices to a good number of banks at a time create bad image of the country's banking sector in the global arena.

The BB probe team found that the banks reported the BC (Bill for Collection) selling rate at Tk 83.85 to the central bank, although they sold the greenback to the importers at rates ranging from Tk 84.00 to Tk 85.50.

The local currency weakened against the US currency in recent months mainly due to the short supply of the greenback in the forex market.

Some overseas exchange houses and exporters have taken such an opportunity, offering higher rates on their greenback, according to the market insiders.

The banks are forced to buy such greenback because they are facing short supply of the US dollar, they said.

In that situation, the ABB leaders urged the BB to look into such higher rates, officially known as telegraphic transfer (TT) clean, sought by overseas exchange houses and exporters, like BC selling rates for importers to ensure stability in the forex market.

The ABB leaders also mentioned about the existing forex market trend in India, Pakistan and Sri Lanka, the meeting participants.

The demand for the US dollar is increasing gradually, mainly due to higher import payment pressure, particularly for the petroleum products and capital machinery.

The central bank has been providing its foreign exchange support through selling US dollars to the banks for settlement of the import bills.

A total of $906 million has been sold to the commercial banks since July 01 during the current fiscal year, as part of its ongoing drive, the BB data showed.

"This foreign currency support may continue in the coming days in line with the market requirement," another BB official added.

The US dollar was quoted at Tk 83.90 in the inter-bank foreign exchange market on Sunday, unchanged from the previous level.

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