Taka loses Tk1.10 in value in single day
The Bangladesh Bank devalued the local currency against the dollar by Tk1.10 on Sunday, the highest devaluation in a single day in recent history, with the inter-bank exchange rate set at Tk89.
At present, the inter-bank exchange rate is Tk87.90 per dollar and the new rate will come into effect from Monday.
The Bangladesh Bank devalued taka after the Bangladesh Foreign Exchange Dealers Association (BAFEDA) proposed setting the rate at Tk89.80 on Sunday.
The central bank devalued taka by 4.7% in the last 11 months from July last year when the inter-bank transaction rate was Tk84.8 each dollar.
The regulator also set the import LC (Letter of Credit) settlement rate at Tk89.15, raising it from the current rate of Tk88. The BAFEDA had proposed setting it to Tk89.95.
Exchange houses will set their trading rate for remitters and exporters for the dollar after adjusting the interbank and import LC rates, said Bangladesh Bank spokesperson and Executive Director Sirajul Islam.
Earlier on Thursday, the Bangladesh Bank held a meeting with the top leaders of Association of Bankers, Bangladesh (ABB) and BAFEDA to find a solution to the current dollar rate volatility.
In the meeting, both platforms were asked to propose rates to the Bangladesh Bank to set a uniform rate for all banks.
Though bankers wanted to set the exchange rates at Tk95 to Tk96 considering the market price, the central bank instructed them to propose rates below Tk90.
"It will be impossible for all banks to maintain the rates. This is because the central bank will not give official directives to implement the rates; it will only suggest banks follow the BAFEDA rates," said a senior banker under the condition of anonymity.
Speaking to The Business Standard, several bank officials observed that the new rates will be ineffective because the dollar balance is not the same in all banks. Some large banks have high income from exports and inward remittances, but most medium-sized and small banks do not have good earnings.
In this situation, if all banks offer a uniform rate to exporters and remitters, only the large banks will be the gainers.
Moreover, remittance earnings have already fallen drastically in some big banks despite having good facilities because of the high difference between official and unofficial rates. In this situation, the rate below Tk90 for remitters and exporters will not be effective, they told TBS on condition of anonymity.
According to Bangladesh Bank's data, Islami Bank held 22.33% of the total remittance earnings which came through the banking channel in the January-March quarter of the current year.
The Dutch-Bangla Bank accounted for the second-highest 12% share in total remittance earnings. The other good remittance-earning banks are Agrani Bank, Sonali Bank, Bank Asia, Southeast Bank, Pubali Bank, Mutual Trust Bank, Janata Bank, and The City Bank.
Other banks collectively held a 30.66% share of total inward remittance.
