Bangladesh
6 years ago

Bangladesh Bank begins special probe into 'misreporting' of forex rate

The front view of Bangladesh Bank seen in this FE file photo
The front view of Bangladesh Bank seen in this FE file photo

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The central bank has started carrying out a special inspection to detect irregularities relating to foreign exchange reporting by the commercial banks, officials said.

Three inspection teams of Bangladesh Bank (BB) started on-site inspection Sunday to find out alleged 'misreporting' on foreign exchange rate to the central bank by some banks.

Besides, overall inflow and outflow of the foreign exchange of the banks concerned have also been probed to assess the actual position on the foreign exchange of the banks.

The teams have been assigned to conduct such allegation against six banks initially, according to the BB officials.

The officials, however, said the name of some other banks will be included into the probe list after completing the first phase of inspection.

"We've decided to probe into such allegations against 18 banks phase by phase," a BB senior official told the FE.

He also said the central bank will take next course of actions against the banks after receiving the inspection reports.

The BB's latest move came against the backdrop of allegations that some banks are trying to mislead the central bank with 'untrue information' about foreign exchange rates offered particularly to the importers.

The banks reported on their BC (Bills for Collection) selling rate ranging between Tk 83.65 and Tk 83.70 to the central bank, using 'web-link' by 11 am each working day.

Some banks, however, had traded the US dollar between Tk 84.50 and Tk 85 in the name of 'corporate deal' but the rates were not reported to the central bank, according to market insiders.

Talking to the FE, a senior treasury official of a leading private commercial bank said, some banks had offered higher rates on the US dollar to the exporters for maintaining business relations.

He also said the banks had also offered higher rates on the US currency to overseas exchange houses for receiving inward remittances to meet our internal foreign currency requirements.

"Some overseas exchange houses and exporters were also responsible for creating the recent volatility in the forex market," he noted.

The BB probe teams are also securitising the forward deals, settled between the banks and their clients during the inspection, another BB official told the FE.

He also said around 29 branches of different banks at port city Chattogram have already been inspected on the same ground.

Meanwhile, the local currency maintained a depreciating trend against the US currency in the recent months mainly due to short supply of the greenback in the forex market.

The Bangladesh Taka (BDT) depreciated by 10 poisha in the inter-bank foreign exchange (forex) market on May 17 mainly due to higher demand for the greenback for settling the import bills.

The US dollar was quoted at Tk 83.70 each in the inter-bank forex market on the day against Tk 83.60 of the previous working day.

Earlier on May 15, the local currency depreciated by 50 poisha in a single day in the inter-bank forex market on the same ground.

The local currency also depreciated by five poisha against the greenback at customer level particularly for imports on May 15 last.

The exchange rate of the US dollar rose to maximum Tk 83.70 for sale of BC selling for importers on the day from maximum Tk 83.65 of the previous working day.

On the other hand, the central bank has continued its foreign currency support to the banks for settling import payment obligations particularly for food grains, fuel oils and capital machinery.

A total of $2.09 billion was sold since July  01 of the current fiscal year (FY) 2017-18 to the commercial banks as part of its ongoing support, according to BB's latest data.

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