Central bank fixes ceiling on profit for money changers

Wednesday, 17 August 2022

After setting a cap on the gap between the buying and selling rates of the dollar against the Bangladesh currency in banks, the central bank has now fixed a ceiling on the profit by money changers.

The foreign exchange companies can now sell the dollar at a maximum of Tk 1.5 over the banks’ selling rate, Bangladesh Bank spokesman Serajul Islam said after a meeting with the Money Changers’ Association on Wednesday, reports bdnews24.com.

The foreign exchange dealers will soon set a uniform rate for the banks to enforce the new ceiling for the money changers.

The central bank capped the difference between dollar buying and selling rates at Tk 1 for the banks in a meeting with foreign exchange dealers and bankers on Aug 14 amid a lingering crisis over the supply of the greenback.

Foreign exchange reserves in Bangladesh slipped below $40 billion in July from $45.51 billion a year earlier. The government has announced a series of austerity measures, including curbs on the imports of luxury goods, to preserve dollars.

Bangladesh Bank also increased surveillance over the open market along with the banks in an effort to stay on top of the spiking dollar exchange rate. It has punished errant bankers and merchants, but the crackdown seemed to have no effect on the market, as the price of the greenback continued to rise in the open market.

The clampdown stoked fears among unlicenced traders. The dollar shortage put an unofficial limit on the size of transactions by the authorised companies and banks.

Despite the ongoing efforts, the dollar’s price has risen in the span of a few days. In May, it was sold at Tk 102 before falling to Tk 98-99 and settling for some time.

But show-cause notices to dozens of money exchange companies and cases against at least 11 others stirred up the open market.

The Bangladesh Bank also ordered the removal of chiefs of treasury departments of five local and one foreign bank for “making extra profit in treasury operations”.

On Tuesday, the central bank lowered the interest rate for short-term investment in foreign currency by 50 basis points, allowing banks to offer a maximum interest rate of LIBOR plus 3 per cent instead of 3.5 per cent.

The decision will allow the exporters, those from the garment sector in particular, to borrow money from banks at lower interest rates.