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Nation mourns Bangabandhu Devil left feeling insecure after Bangladesh called ‘heaven’ Rights abuses: Activists call for free enquiry commission 50 hurt as two BCL factions clash in Barguna Death of 5 in Uttara crash: Probe body formed 2-day school weekend from next year PM expresses grief over deaths in Uttara crash Armour-plated small dinosaur unearthed FA investigating Tuchel for comments on referee A woman is dead. Why are we gossiping about her personal life? “Jannat-Jahannam” confusion as state minister’s speech on Bangabandhu goes viral 5 pedestrians injured as rods fall on them from crane in Gulistan Civil society needs enabling conditions to resolve human rights challenges: Bachelet Russia steps up assault in Donetsk Teacher’s death: Husband sent to jail
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Business

Banks asked to convert export proceeds into taka immediately

Star Business Report
Mon May 30, 2022 10:20 PM Last update on: Mon May 30, 2022 11:20 PM
targets set for banks to cut power

Bangladesh Bank has asked banks to convert major export earnings of businesses into taka immediately as it looks to increase the supply of US dollars in the economy.

The rule will be applicable for the value-added portion of export earnings. The value-added portion refers to the export proceeds that are available to exporters after their import bills for back-to-back letters of credit have been met.

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"It is observed that the value-added portion is not encashed into the taka immediately on the repatriation of export proceeds, resulting in delayed cash support to exporters for meeting working capital needs in the taka," said the central bank in a notice today.

Banks have recently alleged that many exporters have not converted their dollars into the taka as the local currency has weakened drastically.

The exporters thought that they would benefit more if US dollars are not converted immediately, intensifying the foreign exchange crisis.

The latest measure from the BB came after the foreign currency reserves fell to $42.29 billion on May 25 in contrast to $46.15 billion in December, driven by higher imports against moderate exports and lower remittance flows.

In Bangladesh, banks are allowed to retain repatriated export proceeds in a foreign currency in a single pool following the encashment of the local value-added portion. These funds are useable only for the settlement of back-to-back import payments of relative exporters.

The retention of export proceeds in foreign currency facilitates exporters to settle back-to-back liabilities without facing exchange losses.

In another notice, the BB said exporters would have to sell their export proceeds to the banks through which they ship goods.

Many exporters sell their export proceeds to banks that offer the higher rate. Yesterday's instruction will put an end to the practice.

This has created a scenario of indiscipline in the foreign exchange market.

Many banks have recently offered Tk 95 to Tk 97 per dollar to exporters. Against the backdrop, they have opted for the lenders that have offered a higher price.

The move will bring stability in the market, said a BB official.

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Bangladesh Bank / Taka / dollar / exchange rate
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