The exchange rate of the US dollar on the informal market, or the kerb market, reached Tk 115 for the first time on Monday amid a supply crisis of the greenback on the formal market.
Exchange houses sold the greenback for Tk 112-115 on Monday after selling it at Tk 110 on Sunday while the rate was Tk 107-109 in banks.
On Monday, the interbank rate of dollar was set at Tk 94.95, raising from Tk 94.7.
On July 26, the exchange rate of the US dollar on the kerb market hit Tk 112.
Bangladesh Bank spokesperson and executive director Md Serajul Islam told New Age that there was a demand and supply mismatch of the dollar due to a high trade deficit in the country.
The central bank is trying to increase exports and remittance earnings to minimise the supply crisis, he said.
He also said that the BB took several steps, including discouraging imports of luxury items, to reduce imports.
Serajul also said that the central bank observed some anomalies in the money exchanges.
So, it has so far conducted inspections in more than 100 exchange houses and issued show-cause notices to 44 houses and suspended licences of five houses.
The dollar crisis in banks also spilled over into the informal market that widened the crunch.
There are many exchange houses which do not have dollars to sell as many have kept reserved dollars expecting more appreciation in the rate while many others are buying a large volume of dollars for business, industry insiders said.
The central bank continued providing the country’s scheduled banks with foreign currency support for managing the current exchange rate volatility.
On Monday, the central bank injected $139 million into the financial market that dipped the foreign reserve to $39.56 billion on Monday from $39.66 billion in the previous day. The reserve was $48.06 billion in August 2021.
The central bank sold $1.19 billion in July to banks to settle their import-payment obligations.
In the past financial year of 2021-22, it sold $7.4 billion dollars to banks, while it purchased $7.7 billion in FY21.
As banks brought export proceeds and remittance at high rates to the country, the importers had to import products at higher rates that eventually affected the prices of the products.
Dollar demand in the country’s banking system has been on the rise from the very beginning of the financial year 2021-2022.
On the formal market, the exchange rate of the US dollar was Tk 84.80 in August of FY22 and the rate rose to Tk 94.9 on Monday.
Though the government and the central bank took a number of measures, the demand for the US dollar remained very strong amid high trade deficit-driven depletion of foreign exchange reserve.
If $7-billion export development fund formed with the foreign exchange reserve is excluded, the country’s foreign exchange reserve would go below $33 billion.
The country’s trade deficit hit a historic high of $33.25 billion in the financial year 2021-22 amid surge in imports and commodity prices on the global market.
In July-June of FY22, the country’s imports stood at a record high of $82.5 billion, up 35.95 per cent from $60.68 billion in the corresponding year of FY21.
The country’s export earnings stood at $52.08 billion in FY22.
