Forex dealers call for cautious LC opening
Siddique Islam | Monday, 22 October 2018
Bangladesh Foreign Exchange Dealers' Association (BAFEDA) will urge its member banks to be cautious about opening letters of credit (LCs) for import, considering the overall forex market situation.
The decision came at a meeting of the technical committee of BAFEDA held at its office in Dhaka on Sunday with its Chairman Ali Hossain Prodhania in the chair.
The members will be advised to be rational and compliant with the Bangladesh Bank's (BB) instructions while quoting foreign exchange rates, according to the meeting sources.
The banks will also be asked to conduct forex transactions, considering their inflow, outflow and availability of foreign exchange in the inter-bank forex market, they added.
"We've reviewed the overall forex market situation, considering the import, export and inflow of remittance," the technical committee chairman told the FE after the meeting.
Mr. Prodhania, also managing director of Bangladesh Krishi Bank, said the technical committee is working relentlessly on ensuring stability in the forex market.
The BAFEDA's latest move comes against the backdrop of a weakening Bangladesh Taka (BDT) against the US dollar.
The demand for the US dollar is increasing gradually, mainly due to higher import payments, particularly those of petroleum products and capital machinery.
The US dollar was quoted at Tk 83.83 each in the inter-bank forex market on Sunday unchanged from the previous level.
On the other hand, the central bank has continued its foreign currency support to the banks for settling import payment obligations, particularly of fuel oils and capital machinery for power plants.
As part of the move, the central bank sold US$ 24 million directly to the banks last week to meet the growing demand for the greenback in the market.
A total of $277 million has been sold to the commercial banks since July 01 of the current fiscal year (FY) as part of its ongoing support, the BB data showed.
The meeting also decided that the BAFEDA would organise a workshop on liquidity and foreign exchange risk management in line with the central bank's ALM (asset liability management) guidelines.