Exporters’ demand ignored, banks cut dollar rate Tk0.50 for remittance

Banks have reduced the US dollar rate for remittance by Tk0.50 two weeks after a uniform rate of Tk108 was announced, although the greenback remained unchanged for export proceeds encashment despite repeated calls from exporters.

The decision on the new rate for remittance, which will come into effect from October, was taken at a meeting between the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers Association (Bafeda) on Monday.

Bafeda said the export proceeds will be encashed at Tk99 as earlier and the interbank rate will be determined by weighing the average of remittance and export proceeds dollar rates, making it Tk1 higher.

Md Afzal Karim, chairman of Bafeda and managing director of Sonali Bank, said the pressure of import payments has reduced compared to before due to various conditions of the central bank. The demand for dollars has also decreased a bit. Hence, the dollar value of remittances has been reduced.

However, exporters say they are losing out due to lower rates for encashing export payments. They said to open a back-to-back Letter of Credit (LC), they are buying dollars at Tk104, but they are getting export proceeds at only Tk99.

This will create complications in our exports and exporters will lose interest, they said.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The Business Standard, "Bafeda's separate rates of remittance and export proceeds encashment is not expected in any way. We, the exporters, are protesting the low rate of exports compared to remittances. We want the rates to be similar."

He also said such disparity in the rate of the dollar will destroy the country's exports. 

Meanwhile, talking to several private banks, it was learned that expatriates have reduced sending remittances after the central bank set a single rate for dollar and export proceeds encashment.

According to the data of the Bangladesh Bank, expatriates have sent $1.26 billion in remittance till 22 September while it sent remittances worth $1.50 billion during the same period in the previous month.

Bafeda provides an import payment rate and interbank dollar rate by weighting the average of five-days' remittance and export proceeds rates of banks while bankers want to average 15-day dollar rates instead. Almost everyone in the meeting agreed on this, say sources.

They argued that if the average of 5 days is taken, the rate fluctuates a lot.

According to a source in the meeting, Bafeda will hold a meeting among themselves on Tuesday or Wednesday to prepare a proposal on weighted average and it will be presented to the Bangladesh Bank. 

Before this, in the meeting of bankers on 11 September, it was decided to buy export proceeds at Tk99 and remittances at Tk108, which went into effect from 12 September.

The weighted average of 55 banks' dollar purchases on Sunday came to Tk 102.09. The price of dollar purchase rate in banks fell to a minimum of Tk99 and a maximum of Tk106.75. Banks settled import LCs at Tk1 more than this rate.