Banks cash in on dollar demand

Some banks have artificially created a greenback scarcity to charge more from importers, seeing a spike in imports.
Within a span of 15 days, some banks have inflated the dollar rate by Tk 2-3, although the greenback has not appreciated as much, several importers told The Daily Star.
Abul Bashar Chowdhury, chairman of Chittagong-based BSM Group, said his firm bought dollars at Tk 77.35-77.40 each ten days ago. Now, some banks are demanding Tk 79.25 for a dollar.
The sudden spiral in the exchange rate of the dollar has put the commodity importer in difficulty as it makes deferred payments of up to 180 days to suppliers, he said.
“We place import orders by projecting cost -- the sudden and significant increase in exchange rate is making us incur losses.”
The prices of import-based commodities are bound to rise as a result of this and ultimately the consumers will be the losers, he said.
Meanwhile, bank officials said the rise in imports and the sluggish export growth have increased the demand for greenbacks.
The imports of fertilisers and petroleum products usually go up during October-November. This coupled with the dip in remittance Eid-ul-Azha has put pressure on greenback supply, they added.
The treasury head of a leading private bank said the inter-bank forex market is seeing liquidity crisis of US dollars. About a month ago, around $70-$80 million would be transacted every day; now, the figure has plunged below $10 million.
However, a Bangladesh Bank official said the data is not correct: $127 million was transacted even on Wednesday.
Around $500 million has been paid so far this month for petroleum imports, he said. Furthermore, about $110 million of advance payment would be made for different components of the Padma bridge next week.
This has raised the demand for dollars “slightly”, he said.  In the inter-bank market on Wednesday, banks sold the dollar for Tk 77.68, which was Tk 77.42 on November 2.
On the apprehension that the rate of dollar may increase in future, many importers have been rushing to make their deferred payments, the official said.
The payment could be made a week or 15 days later but they are driven by panic and the banks are increasing dollar rate taking advantage of the situation.

Kazi Saidur Rahman, a general manager of Bangladesh Bank, said the central bank has around $22 billion in reserves and sold about $70 million to banks in the last three days. “The market situation will ease next week.”
After a gap of two and a half years, BB sold greenbacks of $45 million to five banks on Monday. On Tuesday and Wednesday, another $25 million was sold.
The BB last sold greenbacks, of around $10 million, to a single bank on June 20, 2012, after which it has been purchasing the currency -- $11 billion so far -- in an effort to keep the exchange rate stable.
During the July-October period of the fiscal year, LC openings for food grain imports increased around 30 percent, industrial raw materials 13 percent and other products 23 percent.
A BB official said on expectation that the price of dollar will increase in future banks and exchange houses are not releasing dollar to the market.