DHAKA: The Bangladesh Bank has announced a cap on the exchange rate for remittance collection, setting it at a maximum of Taka 123 per dollar. This measure is part of a broader strategy to stabilize the foreign exchange market amid recent volatility.
According to Bangladesh Sangbad Sangstha, the central bank has also introduced a dashboard to closely monitor market data, enhancing transparency and control. The move comes as the country’s foreign exchange market experiences turmoil due to a surge in dollar demand. Central bank officials have outlined several corrective measures to address the issue.
Officials from the central bank identified multiple factors contributing to the ongoing dollar market volatility. A primary cause is the increased demand for dollars towards the end of the financial year, driven by a rise in loan repayments and other financial obligations. Furthermore, the central bank’s suspension of dollar sales to meet International Monetary Fund (IMF) targets has restricted the dollar supply in the interbank market, exacerbating the demand-supply gap.
Bangladesh’s downgraded credit rating has also affected correspondent relationships with foreign banks, posing challenges in issuing UPAS (Usance Payable at Sight) letters of credit, deferring payment maturities, and maintaining offshore banking loan inflows. The role of aggregators and intermediaries in remittance collection, alongside a mismatch in dollar inflows and outflows by commercial banks, has further complicated the situation, as stated by the central bank.