Bangladesh Bank orders removal of treasury chiefs of six banks

The central bank issues the order for their involvement in raising the price of the US dollar

Monday, 8 August 2022

Bangladesh Bank has ordered the removal of treasury chiefs of six banks for their involvement in raising the price of the US dollar by hoarding more greenbacks than necessary.

The banks include five local ones and a foreign bank, reports bdnews24.com.

They made an extra profit through the treasury operation, central bank spokesman Serajul Islam said on Monday.

Another central bank official said it sent letters instructing the banks to take action against the officials.

Bangladesh adopted a floating exchange rate system in 2003 to effectively integrate with the global market.

However, the central bank imposed tight controls on the dollar exchange rate due to the massive depletion of the greenback it has in its coffers.

In mid-May, the price of the US dollar rose to Tk 102 in the kerb market. In the following two months, the dollar supply in the market increased, mostly by the Bangladesh Bank, and the rate was somewhat stable, fluctuating between Tk 97-98.

It increased again recently, prompting the central bank to launch a crackdown on money changers for fraudulent activities to raise the US dollar rate against the taka. It suspended licences of at least five money exchange companies and asked dozens of others to explain irregularities.

The steps taken by the central bank, however, had little effect on the market. On Monday, the dollar was exchanged at Tk 114 in the open market while the interbank rate was Tk 95.

Finance Minister AHM Mustafa Kamal said fraudulent imports were exacerbating higher dollar prices along with inconsistency in demand and supply of the currency.

Selim RF Hussain, president of the Association of Bankers, Bangladesh (ABB), said some banks were not releasing the US dollars, forcing other banks to buy the greenback from money changers and the haggling is making the foreign currency costlier against the taka.

He called for measures to make the interbank US dollar market dynamic, alleging that some banks were taking advantage of the situation.