During a recent trip to the Kingdom of Saudi Arabia (KSA), Salman Fazlur Rahman, Prime Minister’s Advisor on Private Industry and Investment, sought extended credit terms to alleviate Bangladesh's pressing dollar crisis. This request was made to facilitate longer payment periods for fuel imports from Saudi Arabia, a critical concern given the current financial constraints. In a press briefing held on Tuesday (February 06, 2024) at the Bangladesh Investment Development Authority (BIDA) building upon his return, Rahman shared insights from his three-day visit. “Currently, we have a 45-day window to settle payments for fuel imports from Saudi Arabia. Given the dollar scarcity, extending this to a year would greatly benefit us. The Saudi officials have agreed to consider this proposal,” Rahman disclosed. Rahman represented Bangladesh at the Islamic Military Counter Terrorism Coalition (IMCTC) meeting, emphasizing Bangladesh’s firm stance against terrorism and the misuse of Islam to justify such acts. “Terror has no religion, and by fostering cooperation among Islamic nations through the IMCTC, we aim to combat the defamation of Islam by terrorism,” he stated. Read: President urges KSA to invest more in Bangladesh The advisor highlighted the unanimous condemnation of the ongoing crises in Gaza by meeting participants, alongside a collective call for resolution. The plight of the Rohingya refugees in Bangladesh was also addressed, with a commitment to seek solutions. On the economic front, Rahman revealed Saudi investors’ interest in establishing a special economic zone in Bangladesh. “We are keen to allocate an economic zone to Saudi Arabia within Bangladesh. Their investment minister has shown enthusiasm for this project,” Rahman noted. Additionally, plans are underway to bolster Bangladesh’s agricultural sector through the joint establishment of a urea fertilizer plant in Saudi Arabia. “This collaboration aims to ensure a steady supply of fertilizers, enhancing our agricultural output. The proposal has been warmly received, with a feasibility study due to conclude by March,” he explained, highlighting the opportunity for private sector involvement alongside government-to-government initiatives. Read more: KSA's Majlish E Shura Council President Abdullah arrives in Dhaka
Members of Border Guard Bangladesh (BGB) on Saturday (November 11, 2023) seized 32,200 US dollars equivalent to around Tk 39.84 lakh from Buripota bordering area in Meherpur district. Tipped off, a team of BGB -6 Battalion from Chuadanga conducted a drive near pillar no 116/4-s and seized the US dollars wrapped in black polythene in an abandoned condition at 10:30 am, Commanding officer of BGB-6 Lieutenant Colonel Syed Mohammad Zahidur Rahman said while briefing reporters. Read: Miscreants break two legs of Jamaat leader No one was arrested in this connection. A case was filed with Sadar Police Station in Meherpur. The seized money will be deposited to the treasurer office of Meherpur district. Read: 3 die in separate accidents in Dinajpur
Bangladesh urged IMF to downsize required reserves to $20 billion for next loan instalment, says official
Bangladesh has now requested the International Monetary Fund to lower the requirement of foreign exchange reserves at $20 billion as a condition of releasing the second installment of the $4.7 billion loans, an official of Bangladesh Bank confirmed this on Monday (October 16, 2023). The request was made to the visiting IMF delegation that reviewed with the officials the progress in meeting its conditions. Read: Myanmar ambassador meets with FBCCI, keen to start direct flight Despite different measures taken by including cutting unnecessary and luxury goods imports, in the last three months, gross reserves declined by $2.58 billion. Two main sources of foreign exchange earnings –inward remittances flow saw a record decline to $1.34 billion in September and export earnings failed to achieve the target. Considering the situation the central bank proposed to the IMF mission led by Rahul Anand to revise the reserves down to $20 billion. Under the terms of the $4.7 billion IMF loan, the actual reserves were supposed to be maintained at $24.46 billion last June and $25.30 billion in September. At the end of December, Bangladesh must maintain at least $26.81 billion in net reserves. Read: PGCB, GIZ set up lab to advance country’s clean energy transition The net forex reserves are now less than $18 billion, according to the calculations of Dr Zahid Hussain, a former lead economist of the World Bank's Dhaka office. However, the IMF also suggested that BB fix the exchange rate of US dollars on competitive market price, which is now being set by the Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) in the concentration of the BB. The central bank earlier relaxed the exchange rate of the US dollar gradually and now the official exchange rate is Tk112 per dollar. Economist Dr Ahsan H Mansur said that Bangladesh has to maintain strict monitoring of trade-based money laundering along with cutting unnecessary imports to check the downslide. Read: IMF lowers growth forecast for current fiscal to 6 percent
The growing backlog in payment obligation is emerging as a major problem in Bangladesh's power sector that may impede the growth of the sector. According to official sources, the payment mode in Bangladesh Government's power purchase agreement (PPA) with the private sector has mainly been made in foreign currency, specially, the US dollar. As per the existing arrangement, as a single payer the state-owned Bangladesh Power Development Board (BPDB) pays to the private power producers in local currency against its purchase of electricity. Under the PPA, the private power producers are allowed to convert the payments into US dollars to meet their different kinds of payment obligations like bank loan, fuel and machinery imports and also paying foreign staff salaries. If the investors are foreign companies, they can repatriate their profits in US dollars, said the officials of the BPDB. They also noted that the BPDB always remains in constant contact with power producers, their banks and the central bank to smooth the foreign currency repatriation. But following the dollar crisis in the country, official sources said in recent months, both the BPDB and the private power producers have been experiencing severe problems in getting dollars from their banks and also from the Bangladesh Bank. Official sources said the BPDB has been struggling to keep up with its payments owed to the private power producers for more than a year. Officials at the Power Division and BPDB said currently the total owed to the Independent Power Producers (IPPs) is $3.5 billion (equivalent to over Tk 35,000 crore) as of September 2023. Read: Rooppur Nuclear Power Plant to receive fresh batch of uranium from Russia’s Rosatom at ‘Graduation Ceremony’ tomorrow As per contract with the government, the IPPs are facing dual problems with their bills. First, they are not getting bills on time and secondly, they are getting partial bills, but not being able to convert the payment into foreign exchange due to the dollar crisis. A top BPDB official admitted the problem to UNB, saying that they had reached an understanding with Bangladesh Bank under a mediation of the Finance Ministry that the central bank will provide on average $20 million every day to BPDB to cover its costs. “But we’re not getting more than $10-15 million a day,” a top BPDB official told UNB on condition of anonymity as the issue is very sensitive and he is not allowed to speak on the issue. He also said that if measures are not taken to contain the growing dues in the power sector it will further aggravate the problem. Read: Japan provides $1500 million to implement Matarbari coal-fired power plant Admitting about the payment backlog, Imran Karim, former president of Bangladesh Independent power Producers Association (BIPPA), said the government should take necessary measures to clear the dues in the power sector. "Otherwise, it will accumulate the dues and create a major problem in the sector", he told UNB. Energy experts said the country is heading for problems in the power sector and it would have a big impact on the overall economy pushing up inflation further. Eminent energy expert and advisor to the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam said the government has been put in such a major problem because of its wrong planning in the power sector. He said that as a result of the wrong planning, the country is witnessing 50 percent surplus power in summer and 70 percent in winter, for which it is heading towards a disastrous situation. “There will be a big indiscipline in the power sector as pressure for private sector’s capacity payment will continue to go up while import of primary fuel will be increasing. Finally, it will lead to energy insecurity,” he told UNB. Read more: Cabinet purchase body approves proposals including 3 solar power plants in private sector
Bangladesh Bank has introduced a US dollar booking policy for maximum 1 year, at a higher rate, to meet future requirements. According to the new rules, after one year, the bank will be able to charge a maximum of 5 percent more than the current dollar price with a 'SMART' rate. The central bank issued a circular in this regard on Sunday. Despite Bangladesh Bank Governor’s decision to not raise exchange rate before election, dollar rate hiked again Under the new rules, dollars can be kept with bookings for up to one year. For this, the buyer has to pay extra. It will be determined by the method with which loan interest rate is determined now. Currently, the dollar price for import is fixed at Tk 110.5. If anyone wants to book a dollar for future, he/she will have to pay Tk 123 per dollar after one year. Selling dollars at higher prices: What is Bangladesh Bank’s action against treasury heads of 10 banks?
Despite Bangladesh Bank Governor’s decision to not raise exchange rate before election, dollar rate hiked again
Bangladesh Bank decided not to bring major changes in the US dollar exchange rate before the upcoming national election. The central bank’s Governor Abdur Rouf Talukder informed of this decision at a meeting with managing directors and CEOs of banks recently. At that meeting, the governor said that Bangladesh Bank will not make any policy changes regarding the dollar market or the foreign currency market before the national election. Despite this decision, the dollar rate has been raised by Tk .50 or 50 paisa in all cases. The price of the dollar has increased to Tk 110 in case of export and expatriates’ income, and to Tk 110.50 in case of import. Read: Selling dollars at higher prices: What is Bangladesh Bank’s action against treasury heads of 10 banks?The dollar rate was hiked again yesterday, which is effective from today. The dollar crisis in the country has become evident since March 2023, following the downturn caused by the Russia-Ukraine war. To deal with this crisis, Bangladesh Bank fixed the dollar price at the beginning. This worsened the crisis. Later, last September, Bangladesh Bank withdrew from determining the price of the dollar. Read: Bangladesh Bank seeks explanations from 13 banks for selling dollars at higher prices This responsibility has been given to the Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers’ Association (BAFEDA). Since then the two organizations have been jointly setting the dollar price for export, remittance earnings, and payment of import liabilities. Read more: Dollar goes off kerb market after central bank-led raids of money exchanges
The Bangladesh Bank (BB) has sought an explanation from 13 banks for selling US dollars at high prices. The summoned banks belong to the private sector, including a Shariah-based Islami Bank. The central bank confirmed the information on Monday (September 04, 2023). The letter was sent to different banks on Sunday (September 3) and the banks have been asked to provide an explanation in this regard within the next five working days. Also read: Dollar goes off kerb market after central bank-led raids of money exchanges The bank’s Executive Director and Spokesperson Md. Mesbaul Hoque told UNB that the trading licences of seven money changers have been suspended for selling dollars at higher prices. An explanation has been sought from 10 more money changers following similar complaints. In addition, banks are also being monitored. Punitive action will be taken if concrete evidence is found, he said. In August, the maximum import price of Tk109.5 was set, but some banks sold dollars up to Tk117, and bought it at Tk116. Also read: Bangladesh Bank working to normalise inflation and dollar crisis despite geopolitical challenges Dollar transactions are inspected by Bangladesh Bank's Financial Integrity and Customer Service and Foreign Exchange Inspection Departments. Recently, the central bank sent for inspection due to the increase in the price of the dollar. After collecting the information, the issues of dollar sales are being verified. In 2021, the central bank ordered to spend Tk 500 crore on the CSR sector from the profits of 12 banks due to excess profit. There were two foreign-owned banks and 10 private sector banks on that list. The dollar crisis in the country has become evident since March last year after the start of the Russia-Ukraine war. To deal with this crisis, the central bank fixed the dollar price at the beginning, but the crisis continued. Also read: Bangladesh Bank introduces 'market-based' dollar exchange rate with rate cap
Bangladesh could soon start trading with India using rupee instead of US dollar, trial for which has been done by Bangladesh Bank recently.The ministry of commerce has placed a written recommendation at the last cabinet meeting regarding the possibility and opportunity of using rupee instead of dollar. Currently Bangladesh exports goods to India worth around USD 2 billion. “The use of rupee will start with Bangladesh's $2 billion trade with India. Bangladesh Bank has almost finished all kinds of trials in this regard. Trading in rupee will be introduced in both countries only after bilateral decision on some issues,” an executive director of Bangladesh Bank told UNB. Read More: Bangladesh Bank yet to allow Indian rupee in foreign trade Wishing anonymity, he said that banking systems in India and Bangladesh have to sign separate agreements on using rupee. Meanwhile India-Bangladesh Chamber of Commerce and Industry (IBCCI) has submitted the total trade account to the central bank in the form of a proposal. This initiative is being taken to overcome the existing dollar crisis, sources said. Bangladesh Bank spokesperson Md Mezbaul Haque said that India-Bangladesh trade, using rupee instead of US dollar, is still in the experimental stage. Some issues still need to be settled. “There are some bilateral issues that need to be resolved. Then the banks have to prepare. But there will be a positive decision in this regard,” he added. Read More: Indian businesses eager to invest in various sectors In response to a question whether there will be a fixed annual dollar quota for opening LCs, he said, LCs will be opened according to the needs of businessmen. But the only source of rupees is from the export earnings of Bangladeshi goods in India. “We are importing more from India than we export. This is why there is a trade deficit. As a result, the amount of rupee is also being considered,” Mezbaul said. Currently India is trading in rupees with Russia, Mauritius, Iran and Sri Lanka. At the Bangladesh-India ministerial meeting on trade, held in the Indian capital New Delhi on December 22-23 last year, India proposed to introduce the rupee as a medium of trade for both countries. Read More: Bangladesh maintains close ties with all – China, US and India: PM tells CNN Then, on the sidelines of the meeting of G20 Finance Ministers and Central Bank Governors held in Bengaluru, India on February 24-25, there was a discussion between the two countries about moving the dollar as an exchange currency. There, Bangladesh Bank Governor Abdur Rauf Talukder and Reserve Bank of India Governor Shaktikanta Das discussed the possibility of such a system using rupee instead of US dollar.
The government has increased sugar price again, by Tk 5 per kg, which will be effective from February 1, 2023. As per discussion with the commerce ministry, a circular has been issued today (January 26, 2023) by the executive secretary of Bangladesh Sugar Refiners Association. After the price hike, the maximum retail price of unpackaged sugar will be Tk 107 while the price of packaged sugar will be Tk 112. Read more: 1250MT sugar on 42 trucks from India stuck at Benapole for a month “Taking into account the price increase in the international market and the exchange rate of the US dollar and the production cost going up, the price of unpackaged sugar per kg has been set at Tk 107 and packaged sugar at Tk 112 per kg – subject to discussion with the Ministry of Commerce,” the notification said. Earlier, the government increased the retail price of sugar in November 2022. Currently, the price of packaged sugar is Tk 107 and unpackaged sugar Tk 102 per kg. In the market, however, unpackaged sugar is sold at Tk 110 and packaged sugar at Tk 120 per kg. The retailers have blamed wholesalers for increasing the sugar price. Read More: Production stops at Joypurhat Sugar Mills for want of sugarcane
With the price of the US dollar skyrocketing, Bangladeshi travellers are directly affected by fluctuating exchange rates. Should you then drop your travel plans until the price of the US dollar becomes stable? Is there any way to deal with this dollar crisis and still travel? Let’s look at some alternative ways to travel abroad without purchasing US dollars. WHY YOU SHOULD CONSIDER ALTERNATIVES TO BUYING US DOLLARS Traveling abroad can be an exciting and enriching experience, but it can also be expensive. One of the biggest expenses of international travel is the cost of converting Bangladeshi taka into the currency of the country you are planning to visit. Travellers usually carry US dollars when visiting any foreign country. The recent price hike of US dollars has made the exchange rate high regardless of the base currency. Therefore, it would be wise and cost-effective for travellers to consider the alternative ways. Read More: Bangladeshi passport’s ranking improves in 2023, still behind Iran and Sri Lanka as per Henley Index WAYS TO TRAVEL ABROAD WITHOUT BUYING US DOLLARS · USE CREDIT CARD Bangladesh Bank advises taking dollars through an international card (dollar-endorsed VISA/Mastercard) in case of traveling abroad. It has given this advice due to rising exchange rates and supply shortages in banks and open markets. The difference between the cash dollar price in the open market and the bank is currently over Tk 10. It is cheaper to endorse dollars on your credit card. In the current situation, it may save you around Tk 5 to 10 per US dollar. However, currently, the exchange rate for cash and card endorsement is the same, which is Tk 106 (as of January 12). According to a news in August 2022, when it cost up to Tk 109.50 to buy one US dollar in the open market, the price of buying dollars through a bank or card went up to Tk 95. Read More: Beach Bucket List: 9 Magnificent Sea Shores in South Asia “This is why we are recommending travellers to request their banks to ask for travelcards instead of asking for cash, so that they pay less,” Bangladesh Bank spokesperson Sirajul Islam told media at that time. · BUY THE LOCAL CURRENCY OF YOUR TRAVEL DESTINATION Buying the local currency of the country where you are traveling can reduce your exchange cost. The exchange rates of different currencies against the US dollar have also gone up. So, you can check if buying your destination country’s currency reduces the cost or not. For example, if you are travelling to India, buying rupees from Bangladesh may give you more currency than converting to the US dollar. You · USE DIGITAL WALLET Many countries now accept digital wallets such as Apple Pay and Google Wallet. If you plan to travel to a country that accepts these types of payments, you can avoid the need to convert your currency altogether. You can load currency using a third-party service. Read More: 10 Best Professions for Travelers · TAKE ADVANTAGE OF FOREIGN ATMS When you are in a foreign country, it can be more cost-effective to withdraw cash from an ATM than to convert currency at a bank or currency exchange shops. If you have a dollar-endorsed card from Bangladesh, you can withdraw money in the country you are traveling to using the local ATMs. However, check with your bank to ensure that your card will work in the country you are planning to visit and see if there are fees for using foreign ATMs.