The Bangladesh government has decided to use the local currency, taka, instead of US dollar to determine airfare for carrying passengers and transporting goods from home to abroad — effective from July 1 this year. The decision was announced in a circular signed by the deputy secretary of the Civil Aviation and Tourism Ministry recently.  Following the directive, all local and foreign airlines operating in the country will have to determine airfare in taka instead of dollars.   Read more: Reduce airfare on Middle East routes: Baira Bangladeshi airlines outside the country have been setting airfare in the currencies of those countries, so airfare in Bangladesh should be in taka too, according to the circular. With the Finance Ministry’s consent, the move was taken on the basis of approvals from the authorities concerned later.      

Fake money is often termed a silent epidemic. The consequences of fake notes on the economy aren’t visible overnight. Rather it has a long-term financial impact that effectively cripples the economy. In fact, the situation became so severe for India that they had to undertake a demonetization policy to curb the supply of counterfeit notes. While the issue with counterfeit currency isn’t as severe in Bangladesh, it is still prevalent. Here are some tips to detect a fake currency note in Bangladesh.  The State of Fake Currency Notes in Bangladesh  The history of fake notes in Bangladesh almost dates back to the introduction of the currency itself. Bangladesh Taka was officially introduced as the state currency in 1972 after the independence. A year later, coins of different denominations of the fraction of 1 taka were also introduced. Currently, the government holds 1 Taka, 2 Taka, and 5 Taka as treasury notes. There have been several changes and the introduction of new notes post-2000. Bangladesh Bank introduced the 1000 Taka note in 2008 with the most recent addition being the 200 Taka note.  Over the years, the security concern over counterfeit currencies has seen BB add several security features to the currencies.  Read More: Govt keen to expand digital banking, examine if digital currency could be launched A look at the pattern of all the busted counterfeit currency gangs in Bangladesh reveals that most of the fake notes are either in 500 to 1000 Taka denomination. It’s a simple case of the economy of scale where the cost of counterfeiting can only be accrued by the 500 and 1000 Taka denominations.  The early counterfeits, before the computer and modern printers, were produced through the hand press system. Needless to say, they were far less accurate and easily detectable. But with more advanced software and printers, fake currencies are becoming more and more like the real ones. A recent bust of a Dhaka-based fake currency gang showed how the security strip, micro prints, and watermark are accurately replicated making it almost impossible for a normal person to distinguish between the two.  Even then, there are some strict guidelines set by Bangladesh Bank to identify fake notes. You can check for all of these if you’re worried about the authenticity.  Read More: HSBC introduces domestic foreign currency transaction through RTGS Ways to Detect Fake Currency Notes in Bangladesh  Watermark  The first obvious sign is the watermark. Each BB-issued 500 and 1000 Taka note has the BB emblem, the denomination value, and a portrait of the father of the nation Bangabandhu Sheikh Mujibur Rahman as the watermark.  Oftentimes, a cheap replicated fake note will have a misplaced watermark or the print of the portrait will be off when held against the sunlight. This is a clear way to detect fake notes.  Security Strip  The second most obvious way to detect a fake note is by looking at the security strip. The security strip is lodged within the note and has distinct features which are near impossible to replicate.  The first thing to look for is placement. The security strip is positioned vertically on the left side of the note. If you carefully check the top of the security strip, you will notice that it intersects the BB emblem printed on the note. Fake notes often fail to be this precise.  Read More: Haji Danesh to be Bangladesh's first cashless campus: Palak The new 500 and 1000 Taka notes have the denomination and the BB emblem printer vertically on them. The older notes from 10 Taka to 500 Taka had the word “Bangladesh” printed in Bangla. The 1000 Taka note had the denomination printed on a mirrored progression along the strip.  Print Quality  The print quality is another indicator to identify fake notes. That is because the printing process of a banknote is very different from traditional home-based printing. A banknote uses high-quality ink and press printing methods to produce notes.  These are rig-like printing machines that are extremely expensive as well as difficult to get hands-on. A typical fake note made with a standard ink printer or even an industrial-grade press printer will not be able to replicate the microprint or the uneven feel at certain places. And that brings us to the next point.  Microprints  Every Bangladesh bank note issued by BB has distinct microprint which not only makes them unique but also highly difficult to counterfeit. These micro prints are more prevalent on the 500 and 1000 Taka notes.  Read More: Towards a cashless society: MFS monthly transactions cross Tk 1.11 lakh crore These notes have small seven diagonal ink prints which have a distinct hand feel to them. additionally, there are several details on the BB emblem as well as the portrait of the father of the nation which is near impossible to replicate with a normal printer.  Serial Number  Bangladesh Bank-issued notes have a unique seven-digit code preceded by two letter grades. The grading system and reading system are not disclosed to the public. Bank teller machines and money counter machines are equipped with the reading mechanism of bank-issued notes.  BB can easily check the authenticity of any note by comparing its serial number with the database.  Raised Ink  Another telltale sign of a fake note is the raised ink. Bank notes, especially the 100, 500, and 1000 Taka notes have raised ink at several points which are easily understood by touch. You can get a feel of the raised ink in the note description, bottom, and sides of the notes.  Read More: Bangladesh Bank to flirt with digital currency en route to cashless society Bangladesh Bank also uses color-shifting ink on the 100, 500, and 1000 Taka notes. If you move the note around under direct light, you will notice the color shifting to a bottle-green tone. This color shifting can’t typically be recreated on fake notes.  The feel of the Note  The currency note paper is not your typical day-to-day use paper. These papers are specifically imported from different foreign sources under exclusive tenders of the Security Printing Press of Bangladesh.  As a result, any person handling a fake note will be easily able to tell the difference between the two. A fake note will be either too smooth or too rough, never exactly the same. The government also has a general import embargo on the exact same type of paper used for printing currency notes.  Final Words  If you look closely, it's easily possible to detect a fake currency note in Bangladesh. Whether it’s the watermark, or hand feel on the security strip, one or the other will definitely be off. With the high denomination of Bangladeshi currencies limited to 500 and 1000 Taka notes, it's relatively easy to spot fake notes. Still, you should be careful while handling and if you notice any anomaly, inform the central bank to report the case.  Read More: Digital Currency: Benefits and Risks of the Cashless Economy in Bangladesh

We are in the middle of the first full working week since Bangladesh’s declared adoption of a floating exchange rate for taka against the US dollar, paving the way for the forces of demand and supply - in a word, the market - to determine the rate going forward. Bangladeshi officials however, have a history of such utterances, without the necessary follow up actions. Most famously perhaps, there is even a formal commitment from 2003 (Bangladesh Bank. Exchange Rate Circular No. 01, 2003 – still available on the BB website), that the central bank subsequently abandoned. As a result, for almost its entire existence as a sovereign currency, taka’s value has been artificially set by the country’s monetary authority, i.e. Bangladesh Bank, and then allowed to float within a certain band - the so-called managed or ‘dirty’ floating exchange rate. Read: Banks reschedule loans worth nearly Tk 6000 crore, waive Tk 2800 crore in interest in first 6 months of 2022 In order to maintain the rate at or near its preferred level, the central bank would intervene in the currency markets to buy or sell dollars as the intervention currency. Maintaining an artificially overvalued rate in comparison to the market value, as Bangladesh Bank has almost always done, necessitates selling dollars from its foreign exchange reserves. Why now? But the “strongest dollar in a generation”, witnessed over the last year or so and likely to persist well into the foreseeable future, was starting to make the dirty floating system very expensive to maintain for Shapla Chattor, rapidly depleting its reserve of dollars. In the 2021-22 fiscal, that ended on June 30, Bangladesh Bank spent $7.62 billion from the country’s foreign exchange reserves as it scrambled to slow down taka’s slide against what some are calling “the hideous strength of the dollar.” In the first two months of the current fiscal, July-August, that coincided with a period in which even the government was forced to recognise the impacts of a range of worrying signs for the economy, it escalated dangerously. Read: Bangladesh received over $1 billion remittance in Sep 1-15 During this period, the central bank spent a further $2.85 billion on shoring up its preferred, overvalued rate, or rates, as it kept stretching to hold on, for taka against the dollar. If you annualise that, you’re looking at spending over $15 billion over the course of the fiscal. Probably more, with all the signs being that US Federal Reserve policies are likely to strengthen the greenback further over the foreseeable future. At a time when the quite rapid depletion of the forex reserves from its peak of $48.1 billion in August 2021 to some $37 billion at the moment has become a matter of concern (and the IMF credibly contending that effectively it is a further $7 billion less), the central bank has been forced to realise it is unsustainably costly to hold on. It has to let taka float. Read Uniform rate: Tk 108/dollar max for remittance, Tk 99/dollar for export income from tomorrow Does it mean BB will not sell dollars again? What that basically means is to adopt a hands-off approach. To refrain from using its intervention tools. Importantly though, it doesn’t give up its authority to do so. It may become interventionist again, at any point - unless it gets to a point where you are charged as a ‘currency manipulator’, as the US did with China in 2019, there is nothing really to give you pause even, once you decide to do it. There is nothing to bind you to ‘letting it float’. And central banks can be clingy. There are no purely floating currencies, it’s all a bit relative. Canada has had a floating exchange rate for longer than any other country. The Canadian national bank has not interfered with its dollar’s price since 1998. The US dollar is a close second. By contrast, Japan and the UK intervene to a greater extent, and India has medium-range intervention by its national bank, the Reserve Bank of India. What kind of exchange rate regime a country maintains over a given period is actually a call that can only truly be made after the event, when you have the data to tell you to what extent there may or may not have been intervention. It’s a bit like assessing whether you’ve been faithful in a relationship or not - you cannot have it up front. You have to look back. Read ABB, BAFEDA will meet tomorrow to set uniform dollar rate for banks But a commitment can be important, and the closest thing resembling such a commitment for Bangladesh Bank that suggests it is preparing to go further this time than it has gone before to letting the currency float came last week: for the first time, Shapla Chattor appeared to accept a suggested rate from the market, along with a mechanism for determining it on a regular basis going forward. What is the market rate? The task for coming up with the market-determined exchange rate had been left to the Bangladesh Foreign Exchange Dealers' Association (Bafeda), in consultation with the Association of Bankers Bangladesh (ABB). After months of meetings between the three parties, last week (September 11), the rate put forward by them, along with a mechanism - a weighted average based on actual transactions over the previous 5 working days - was accepted by Bangladesh Bank in a meeting, and subsequently announced. Since September 13, this rate has been published on the BB website as the nominal rate for the dollar, along with the following note: “Exchange rates of Taka for inter-bank and customer transactions are set by the dealer banks, based on demand-supply interaction and indicative rates suggested by Bangladesh Foreign Exchange Dealers' Association. Bangladesh Bank is not in the market on a day-to-day basis, and undertakes USD purchase or sale transactions with dealer banks only as and when needed to maintain orderly market conditions.” Read Foreign exchange rate stable after Bangladesh Bank tightens spending Note the phrase "as and when needed" - it tells you that should the need arise (most likely if the government perceives taka has depreciated too much), the central bank still reserves the right to intervene and effectively override what it has committed to. There will be teething issues - reports suggest Bangladesh Bank is still selling dollars, but if it stays the road, this will taper down. There are criticisms of the agreement entered into with BAFEDA, in particular how it creates three different dollar rates - one for exporters, one for remitters and one for importers. And leaving the exchange rate to the market while holding on to a fixed interest rate regime (interest rate on lending is currently capped at 9%) goes against conventional wisdom in economics. These are issues we will get to explore in future. Explainers related to the economy are vetted by economists. Read BB eases outward remittance rules for foreigners

Bangladesh Bank (BB) has depreciated the local currency again by Tk0.90 to re-set the exchange rate at Tk 89.90 per US dollar.  Thursday’s devaluation of taka – the eighth this year - sought to discourage unnecessary imports amid global price hike of commodities.  Md Serajul Islam, executive director and spokesperson of BB told UNB that though the new exchange rate was not formally conveyed to banks, the BB sold $135 million to banks at the rate of Tk89.90. READ: Taka weakens further as BB sets new single exchange rate of USD at Tk89 The BB has resorted to frequent depreciation of Bangladesh currency to stabilize the restive foreign exchange trade.   Earlier the BB depreciated local currency by Tk0.25 to Tk0.40. But the central bank has recently increased the percentage of the devaluation.

Bangladesh Bank (BB) Governor Fazle Kabir will have a meeting with the managing directors (MDs) of commercial banks on the volatile dollar. The meeting will be held Thursday, Sirajul Islam, spokesperson and executive director of the central bank, told UNB Wednesday. "The governor will hold a meeting with leaders of the Association of Bankers Bangladesh (ABB) Thursday to discuss the overall forex market situation." The meeting will look into why the banks are selling dollars at higher rates than the inter-bank exchange rates. Other issues in the banking sector can also be discussed, Sirajul said. Also read: BB depreciates taka by Tk 0.40 against US dollars

In the space of 12 days, Bangladesh Bank has recently twice devalued the exchange rate of taka against the US dollar. The central bank fixed an exchange rate of Tk86.7 against the dollar after devaluing the currency by Tk0.25 on Monday (May 9), which followed a devaluation of Tk0.25 on April 27.  Despite the devaluation the scheduled banks are selling US dollar at Tk 3-4 higher, while in the kerb market the dollar is selling at around Tk93. The Chief Financial Officer (CFO) of several private banks confirmed to UNB that they are selling the dollar at Tk 89-90 as they are purchasing dollars at a higher rate than BB'S exchange rate from other private banks. Bangladeshi taka depreciated  by over 25 percent after the latest deprecation of taka, in the last 13 years. In February 2009, the exchange rate per US dollar was Tk69. But how does it affect the masses, if at all?Talking with UNB, the CFO of a private bank said that a consumer has to pay Tk 125.66 now to buy goods or services from the global market which he could buy at Tk100 13 years ago. It means the common people have to bear the brunt of local currency depreciation against the US dollar as Bangladesh is importing goods mostly by using dollars. The exchange rate of US dollar against Bangladeshi taka has been fixed by the government since independence. The taka was declared convertible (exchangeable) for enhancing foreign trade on March 24, 1994. And in 2003 this exchange rate was made floating. From then on, the national currency is no longer devalued or revalued by declarations. However, although the exchange rate was floating, it was not entirely market-based. The central bank has always had indirect control over it through its buying and selling of dollars, in what is called a ‘managed float’. READ: Central bank devalues taka to boost exports, remittances Earlier, the BB purchased $8 billion from different banks in the fiscal year of 2020-21 to maintain the exchange rate of taka, when import orders decreased severely for worsening pandemic.  The central bank, however, supplied $ 2.5 billion so far in the current fiscal year as the import demand increased by 50 percent after the pandemic situation. Former adviser of caretaker government Dr. Mirza ABM Azizul Islam told UNB that import demand has increased in the post lockdown time as the industrial production shows a surge. The price increase of LNG and petroleum products in the global market is also another cause to raise the dollar demand as Bangladesh uses USD to meet all kinds of import payment, he said. The country’s forex reserves remain better till now, export income and inward remittance flow also good, so there is no reason to be worried about weakening taka at this stage, but a cautionary measure is to be taken for stabilizing the price of local commodity markets, Mirza Aziz said. Former governor of BB Dr. Salehuddin Ahmed said that the exporters become happy if taka becomes weak, but it creates pressure to raise prices in the domestic market. He said the central bank sometimes relaxed policy to increase dollar exchange rate so that the expatriates and exporters could send more forex income to the country.