The Bangladesh Bank has suspended the operation of a money changer company for holding more dollars than the authorised limit at a time when the local currency continues to lose ground against the US currency.
The company, Bismillah Money Changer, also did not report to the Bangladesh Bank about its daily transactions as per rule, an inspection of the central bank has found, according to officials.
Currently, there are 602 authorised money changers in the country, out of which 235 are valid and the rest have their licences suspended or revoked.
According to rules, a money changer house can keep a maximum of $25,000.
A senior official at the central bank said money changers usually keep less amount of dollars than the mandated limit.
"It is being suspected that many money changer companies are now keeping more dollars than the mandated limit in hopes of making profits by selling the foreign currency at higher prices," he said.
The dollar price in Bangladesh has been rising in recent months following the Russian invasion of Ukraine and global inflation, which have inflated the country's import bill and the current account deficit. Amid the crisis, the country's foreign exchange reserve fell to $39.67 billion as of July 20 - sufficient for just over five months worth of imports - from $45.5 billion a year earlier.
Earlier on Tuesday, the cash dollar price surged to a record high of Tk112 in the kerb market prompting the central bank to initiate an inspection. The following day, the dollar price came down to Tk108 but rose again to Tk110 on Thursday.
Prices of the dollar have reached extreme highs on banks as well. Banks sold cash dollars at a maximum of Tk108 on Thursday, while the Bangladesh Bank sold $50.40 million to banks at the interbank exchange rate of Tk94.70. The central bank has sold more than a billion dollars from reserves since July 1 of the current fiscal year.
Among the state-owned banks, Rupali Bank sold cash dollars at a rate of Tk104.95, while others sold at the rate of Tk102 on the day.
Meanwhile, Bangladesh Bank spokesman and executive director Md Serajul Islam said Bangladesh Bank will take stricter measures, including cancelling licenses, to prevent instability in dollar prices.
This warning came at a time when concern was rising due to banks and money exchangers selling dollars at higher prices than the Bangladesh Bank fixed rate.
Meanwhile, a nine-member delegation of the Federation of Bangladesh Chambers of Commerce & Industries (FBCCI), headed by the trade body's President Jasim Uddin, called on the Bangladesh Bank governor to take steps for controlling the spiralling prices of the US currency on Thursday.
"I have demanded to find the traders and banks responsible for the instability of the foreign exchange market and take action against them. We are in a volatile situation… where the cooperation of the government and Bangladesh Bank is needed," Jasim told journalists after the meeting.
Besides, he also requested the central bank governor to postpone lifting interest rates against loans, which has been in talks recently.
Speaking about the ongoing financial crisis, the FBCCI president said the fear about the economy is unfounded.
"There is no danger of any major crisis. We have a good amount of reserves. [Our] Economic conditions are much stronger than in many developed countries. However, the spike in dollar price is causing problems in opening letters of credit (LCs). That is why banks should keep a watchful eye," he added.
Earlier on Wednesday, Finance Minister AHM Mustafa Kamal said stern action will be taken against those trying to artificially increase the dollar price.
"Many are making import arrangements by hiking the [dollar] price. Denied by one bank, they are moving to another offering a higher price. The government is working to put an end to this," he said.
DMP Additional Commissioner of Police (Detective) Mohammad Harun-ur-Rashid also warned of strict actions against illegal dollar hoarding.
"If anyone illegally hoards dollars, necessary legal action will be taken against them," he said at a press conference on Thursday.
LC settles at Tk105
Banks on Thursday settled import LCs at a maximum rate of Tk105, the same rate as Wednesday's.
Heads of the treasury departments of several private banks told The Business Standard that they had to pay a rate of Tk107-108 to collect dollars from the exchange houses. Besides, exporters had to pay Tk107-108 per dollar for encashing their export proceeds.