The dollar price has surged to nearly Tk 128, fuelled by alleged market manipulation by some banks and money exchange houses, and an increased demand for the greenback ahead of Ramadan, the fasting month of the Muslims.
The massive surge in dollar prices would raise the prices of essential products like onions, dates, soya bean oil, lentils and spices ahead of Ramadan, nullifying the government鈥檚 efforts to keep the commodity supply smooth and the prices stable in the month when the demand for these items usually surges.
The dollar price surge came at a time when the country is already grappling with severe inflationary pressures.
Businesses warned that the dollar price surge could disrupt the supply of essential commodities before Ramadan, likely to begin early March, as businesses might hesitate to import products at such high costs.
They noted that the benefits of value-added tax exemptions meant to encourage imports could be invalidated by the rising exchange rate, further straining supplies and increasing inflationary pressures.
Bank officials have alleged that some banks, despite not requiring large amounts of dollars for their own needs, are purchasing dollars from foreign exchange houses and local market at high rates and selling them to the other banks at even higher rates.
Such activities, they said, have disrupted the market by creating an artificial shortage of the greenback and pushing up the dollar price.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, expressed concerns over such manipulation.
He stated that these banks and exchange houses were acting as major players on the market, taking advantage of the increased demand for dollars ahead of Ramadan.
He noted that the Bangladesh Bank鈥檚 dollar purchases were minimal and had little impact on the overall market.
Mahbubur suggested that the central bank should liberalise the dollar market in line with the International Monetary Fund recommendations while closely monitoring activities to prevent banks from exploiting the system.
Businesses said that higher dollar rates mean increased import costs, which, in turn, would raise production expenses and consumer prices.
This could worsen the country鈥檚 inflation crisis, affecting purchasing power and the overall consumer spending.
To ensure the availability of essential goods during Ramadan, the central bank has encouraged banks to open letters of credit for imports.
However, the BB鈥檚 steps of buying dollars from commercial banks to repay foreign debts and meet IMF-mandated reserve targets have further tightened the market.
The gap between the official exchange rate, capped at Tk 120 under the crawling peg system, and the rates offered by some banks and money exchange houses 鈥� ranging from Tk 125 to Tk 128 鈥� highlighted regulatory discrepancies.
In a meeting with the Bangladesh Bank on December 18, the IMF stressed the importance of聽adopting a more flexible and market-driven exchange rate system.
In response, the BB plans to introduce a reference rate for foreign currencies based on daily bidding rates provided by banks.
The dollar rate was Tk 94.7 in July 2022 and Tk 84.8 in July 2021.