In an effort to stabilize the currency rate market, the Bangladesh Bank has formally declared a maximum exchange rate of Taka 123 per dollar for remittance collection.
The Bangladesh Bank announced today that the estimated rate for cross-currency transactions cannot go over this cap.
To ensure more transparency and control, the central bank has installed a dashboard to closely monitor market data in addition to regulating the exchange rate for remittance collection.
Along with other measures, the central bank has drafted this one in the midst of the country’s foreign exchange market’s relative instability.
As the country’s foreign exchange market is facing turmoil to some extent due to surging dollar demand, Bangladesh Bank has identified key causes and has been implementing corrective measures, according to central bank officials.
Officials said the central bank blamed a number of interrelated issues for the continuous volatility of the dollar market.
The higher demand for dollars toward the end of the fiscal year, when loan repayments and other financial commitments increase, is one of the causes. To make matters worse, the central bank recently stopped selling dollars in order to reach IMF-mandated goals.
This ruling has further widened the gap between supply and demand by limiting the amount of dollars available in the interbank market.
Besides, Bangladesh’s downgraded credit rating has disrupted correspondent relationships with foreign banks, making issuing UPAS (Usance Payable at Sight) letters of credit, deferring payment maturities, and maintaining the inflow of offshore banking loans more challenging.
Another significant factor is the role of aggregators and intermediaries in remittance collection.
Besides, a mismatch in dollar inflows and outflows by commercial banks has further complicated the situation, added the central bank.
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