Recent fall in inward remittances, earnings from exports, and a looming global recession are all signalling that the external account crisis will be prolonged further, they say. They projected that around $20 to $25 billion worth of foreign currency has been consumed in different forms by informal transactions, which are not recorded at any official level. Because of this, the depth of the foreign exchange crisis is remaining less understood and unaddressed. they say.  Dr Debapriya Bhattacharya, a macro-economist and a Distinguished Fellow at the Centre for Policy Dialogue (CPD), told UNB that to understand the magnitude of the problem it is important to see how it works or does not work in a complex market of foreign currency. “We should take note of it that a big volume of the foreign currency, I mean, US dollar is used for financing consumption of goods and services overseas as well as third-party cross-border payment for smuggled items such as gold and cattle,” he said. “Moreover, illicit financial flow is also taking place from over-invoicing in the private sector transactions and public sector projects,” he said. In line with these unrecorded and informal, and often illicit foreign exchange transactions, the monetary policy in general and foreign exchange regulation, in particular, have limited institutional effectiveness with regard to external balance management, he pointed out. Debapriya said Bangladesh is now a $500 billion economy, and managing such an emerging macro-economy with a fast-changing global scenario demands institutional reforms to swiftly oversee the forex market. As the government negotiates balance of payment support from the International Monetary Fund (MF) such reforms addressing the informal transactions of foreign currency will become a major concern to deal with, he said. Read: Market-based foreign exchange rate may be introduced soon: Finance Minister This will also need complementary trade and investment policy reforms, he added. Though the economy is expanding, the institutional reforms and capacity is not being enhanced accordingly, he said. He said that the World Bank has rightly predicted that unless massive reforms are done Bangladesh’s economic growth would slip in the face of impact of global trade competition. Dr Mohammad Abdur Razzaque, an economist and specialist in applied international trade, told UNB that falling remittances by 25 percent and export falling by over 6 percent is “a warning for Bangladesh’s forex market.” He said Bangladesh will get an advantage slightly from the falling prices of fuel, edible oil and other commodities in the global market due to a recession. The use of forex for import payments will be decreased at the same time, affecting Bangladesh’s export income, and the trade deficit will also widen then, he said. In the first two months (July-August) of the current fiscal year 2022-23, the trade deficit stood at $4.55billion. As the export income is less than the import spending, this large trade deficit appeared at the beginning of the fiscal year. At the same time, the deficit in the current account balance of foreign transactions also exceeded by $1.5 billion. Also read: Foreign exchange rate stable after Bangladesh Bank tightens spending According to Bangladesh Bank, in the first two months (July-August) of the current fiscal year, goods worth $12.69 billion have been imported against exports worth $8.13 billion. This has created a trade deficit of $4.55 billion. The deficit volume will widen more as the export in last month (September) fell by 6 percent. Bangladesh Bank is selling US dollars from the reserves in continuation of the last fiscal year to bring 'stability' to the forex market. The central bank sold $2.57 billion from reserves in two months (July-August) and of the current FY 2022-23. The central bank sold $7.67 billion from reserves in the FY 2021-22 to stabilize the forex market. Bangladesh had never sold so many dollars from the reserve in a single fiscal year earlier. However, in the previous financial year (2020-21), Bangladesh Bank bought a record $8 billion to keep the forex market stable during the falling trend of imports during the Covid-19 pandemic.

In a bid to tame the restive foreign exchange market the Bangladesh Bank has depreciated the local currency by Tk1.60, the highest so far, to fix the exchange rate of US dollar at Tk91.50. Monday’s devaluation of taka, for the ninth time this year, came as the central bank is grappling with the growing demand of the greenback compared to supply. Md Sirajul Islam, executive director and spokesperson of BB told UNB, "The rate at which Bangladesh Bank sells dollars to banks is considered as the interbank selling rate." Also read: BB allows floating exchange rate of US dollar amid pressure On Monday, the central bank sold per US dollar at Tk91.50. Last Thursday, the BB depreciated taka by Tk0.90 and fixed the exchange rate at Tk89.90. At the beginning of January this year, the central bank increased the exchange rate of the dollar by Tk0.20 to Tk86. On March 23, taka weakened by Tk0.20 and fixed exchange rate at Tk86.20. On April 27, it was devalued by another Tk0.25. Then the exchange rate of per dollar stood at Tk 86.45. On May 9, the exchange rate of taka was devalued by Tk0.25 to and fixed it to Tk 86.70. Also read: BB to set uniform exchange rate to stabilize volatile dollar Then on 16 May the value of taka was reduced by Tk0.80 and the exchange rate was fixed to Tk 87.50 against per US dollar. Then on May 23, taka depreciated by another Tk0.40 and the price was fixed at Tk87.90.

Bangladesh Bank (BB) has decided to set a uniform exchange rate of US dollar with taka for all banks to follow to tame the volatile forex market. The central bank asked the banks and foreign exchange dealers to recommend a uniform rate by Sunday on which it can take a decision. This emerged from a tripartite meeting the central bank held on Thursday with the Association of Bankers, Bangladesh (ABB), an association of banks’ CEOs-MDs, and Bangladesh Foreign Exchange Dealers Association (BAFEDA). Also read: Dollar rate: BB governor to hold meeting with bank MDs Thursday The meeting also warned banks to stay away from any manipulation in destabilize the forex market amid a fall in the reserve. Md Serajul Islam, executive director and spokesperson of BB told reporters after the meeting it also discussed ways to increase remittance, curb unnecessary import and some other banking issues. The BB governor Fazle Kabir assured liquidity support and dollar supply to the banks to meet the dollar demand and bring back stability in the market. Also read: BB depreciates taka by Tk 0.40 against US dollars Besides, the BB decided to stop selling export bills from a bank to any other bank. ABB Chairman and BRAC Bank Chief Executive Officer (CEO) Selim RF Hussain told UNB, several decisions have been taken in the meeting to ensure discipline and transparency in the foreign exchange market.

Bangladesh Bank (BB) on Monday depreciated taka by Tk0.40 re-fixing Bangladesh currency’s exchange rate against US dollar at Tk 87.90 to stabilize the volatile forex market. This has been the fourth depreciation of taka against the greenback in past 27 days. Now a US dollar is selling at Tk 87.90 in the inter-bank money exchange. Different commercial banks are selling cash dollars at five to six taka more. Dollars are being traded at Tk 97 to Tk 98 in the open market or Kerb market outside banks. Also read: Dollar price decreases in kerb market, after a hefty raise The BB has sold a total of $5.60 billion to different banks till May 12 of current fiscal year. In the last FY 2020-21, the BB purchased over $8 billion from different commercial banks to keep the exchange rate of taka with the US dollar stable. Banks received huge remittances last year, but they (banks) could not spend those due to Covid-induced fall of import demand. Md. Serajul Islam, executive director and spokesperson of BB told UNB that the dollar price has been re-fixed at Tk 8.90. Also read: Despite taka depreciating, banks selling dollars at Tk3-4 extra Rising prices of other commodities, including fuel, in the global market and increased import pressure in the country have put pressure on the forex. He said Bangladesh Bank is supplying dollars according to the demand of banks considering the market situation.