Huge outflow of foreign currency during Hajj and Eid-ul-Azha has created a crisis of cash US dollar in Bangladesh, according to market players and the regulator.
The crisis has now forced the central bank to request the National Board of Revenue to withdraw tax on import of US dollar notes by local banks.
Hajj and the increase in the quota for cash when travelling outside the country have drained out the cash dollar reserves this year, said Nazneen Sultana, deputy governor of Bangladesh Bank.
Generally, the demand for cash dollar rises ahead of Hajj every year.
More than one lakh Bangladeshis performed Hajj this year, and each of the pilgrims was allowed to carry $1,500 in cash.
If the pilgrims took $1,000 on average each, the outflow of dollar with one lakh of them would come to $100 million.
On the other hand, the BB in April last year increased the foreign exchange quota limit for private travellers to $12,000 a year for an adult from $5,000 previously.
Lots of Bangladeshis now go abroad for holidays. But the BB has no exact data on how much greenback flew out of the country during Eid-ul-Azha.
Spending for Puja and rising medical tourism have created further strain on the cash dollar reserves, according to a senior treasury official of Jamuna Bank.
Like many other banks, Jamuna is also facing a crisis of cash dollar, with its holding almost exhausted.
But the situation has become a boon for some people: hoarders and money exchangers are benefitting from the price hike of cash dollar, with the exchange rate for a US dollar exceeding Tk 82 in the curb market in recent days.
However, the rate remained almost unchanged at Tk 80-Tk 80.9 a dollar yesterday at banks and authorised exchange houses.
“What is the point of raising the price when there is no cash dollar in the market?” said a senior treasury official of Prime Bank when asked why banks did not increase their selling rate for the greenback.
Some bankers blamed supply-side constraints for the shortage of cash dollar in the market. They said that the source of cash dollar has been struck by the poor inflow of foreigners in recent days.
Primarily, there are two sources of cash dollar: non-resident Bangladeshis, who bring cash greenback when visiting their near and dear ones, and foreign nationals, including businessmen and tourists.
“The demand for cash dollar is there, but we see a shortage in supply,” said the Prime Bank official.
Two senior BB officials have also witnessed this crisis when they were trying to buy dollar for their relatives who were travelling to the US.
This crisis has prompted the BB to request the revenue department to waive tax on the import of cash dollar.
However, some local banks differed.
“There is no strong ground behind this crisis. It seems unusual to us,” said a top official of Islami Bank Bangladesh that handled one-fourth of the country's inward remittances worth over $15 billion in fiscal 2014-15.
The official also said they did not see any extra pressure on the outflows.
A senior treasury official of NCC Bank was surprised to see the crisis of cash dollar in the market.
People who visit foreign countries frequently use their credit cards and not cash for most of their payments, he said.
An official at One Bank's Dhaka EPZ branch also said he did not see any shortage of the greenback.
“I have many foreign clients who buy and sell the greenback regularly. They are getting our services,” he said.
The Daily Star also spoke with an official of the NBR on the central bank's request for importing US dollar notes.
The official said a letter has been received but no decision has yet been taken.
On the tariff of importing cash foreign currency, neither the BB nor the NBR could specify the rate. “We don't know the tariff rate. The NBR knows it,” said Mahfuzur Rahman, spokesman of the BB.
At present, the country's foreign exchange reserves stands at over $26 billion, and the majority of the amount remains invested in foreign treasury bills, bonds, sovereign bonds and gold.
Bangladesh also received over $15 billion as remittances in fiscal 2014-15. But the remitters send their money through exchange houses and their beneficiaries get it in local currency.