The dollar crisis is not going away. This crisis has been going on for almost two years. Bangladesh Bank took various initiatives to overcome the crisis. Although the crisis has not ended, it has become more pronounced. As a result, economists are blaming the wrong decision of Bangladesh Bank for the increase in dollar price. On the other hand, a syndicate of businessmen is making this crisis worse for their own benefit – claims of the central bank itself. Besides, this cycle behind the ongoing dollar crisis in the country is not bringing export income to the country. Bangladesh Bank has asked the commercial banks to be careful as they are laundering money abroad by showing the price of products more or less.
However, economists say, in fact, the issue of determining the exchange rate of the dollar has not been left to the market. And that is why there are multiple exchange rates for the dollar. Bangladeshi policy makers have a kind of sensitivity about the market price of the dollar. They feel that once pricing is left to the market, there is no telling where it will end up. Besides, Bangladesh Bank is also skeptical about whether it can be brought back under control. A top official of Bangladesh Bank said on condition of anonymity that money laundering is the main reason behind the country’s current financial crisis. Trafficking is almost impossible without the connections of traders. 80 to 90 percent of trafficking occurs using commercial channels. He said, ‘Suppose a politician or bureaucrat commits money laundering. How will they do it then? Large amounts of money laundering are not possible through avenues other than business channels. And they are not safe either. If the businessmen think about the country and cooperate with Bangladesh Bank, then this situation can be easily overcome.
This official said, there is exercise of power in our country. But if the banks take a strategic role, the smugglers can be controlled to some extent. Bangladesh Bank can take action if the bank informs Bangladesh Bank about the traffickers’ information. However, this top official thinks that this task is not easy as businessmen have their own banks.
A senior official of a private bank, who did not wish to be named, said that the impact of remittance reduction has already been on expatriate income. The trend of the hundi also increased due to the high dollar price in the open market. If the hundi is not reduced, the reserve will go to the bottom.
On October 18, the central bank held a meeting with the Association of Bankers of Bangladesh (ABB), the organization of the bank’s managing directors. Still met several times. However, in that meeting, the central bank organized this meeting to decide what to do to deal with the ongoing situation of instability in the dollar market, high inflation and interest rates of bank loans. At this time, the Central Bank has urged for the proper implementation of the economic policy changes that have been brought. Besides, the MDs have been given an idea about the problems created along with the direction to take necessary steps to keep the supply of dollars normal.
Blaming the businessmen for the current crisis, Bangladesh Bank said that the amount of goods that have been exported is not coming to the country. Rather, Bangladeshi businessmen are extending the time to pay the product price. As a result, there is a deficit in foreign trade.
Earlier, Bangladesh Bank Governor Abdur Rauf Talukdar and Head of Bangladesh Financial Intelligence Unit (FIU) Masud Biswas said in a separate press conference that some business groups laundered money by showing the price of products up to 200 percent higher (over invoicing). If steps are taken to control it, these traders start money laundering by under invoicing or showing low product prices. In this way, the gang does money laundering and tax evasion at the same time. In addition, in a press conference organized by ABB last May, it was reported that one and a half billion dollars were being smuggled every month under the cover of trade. According to the current exchange rate, this figure is more than 16 thousand crore rupees in local currency. Big industrial groups were involved in trafficking. However, ABB leaders did not reveal the names of these industrial groups. Bangladesh Bank also did not disclose the names of those involved in the over-under invoicing.
Executive Director and Spokesperson of Bangladesh Bank. Majbaul Haque said that controlling inflation in the country is the biggest challenge now. Several policy changes have been introduced to control this but are yet to be fully implemented. Hopefully, in the next two-three months it will be fully implemented and a positive change will come.
When asked to know the reason for the country’s dollar crisis, he said that many businessmen are not bringing the export price to the country. Instead, the foreign buyers are extending the payment period. As a result, the dollar is leaving the country to pay the import price, but the dollar is coming in less against the export. Deficiency is being created. We have noticed these issues and are trying to resolve them.
The spokesperson also said that according to Bangladesh Export Development Bureau data, last year 55 billion dollars worth of goods were exported. But 46 billion dollars came to the country. That means there is a deficit of 9 billion dollars.
After the meeting, Chairman of ABB and Managing Director of BRAC Bank Salim RF Hossain said that two issues were discussed in the meeting. One of them is CIB. We have some problems with this. We have taken up some strategies to increase intelligence.
The government is giving two and a half percent incentive for sending remittances through banking channels. Apart from this, currently the country’s banks can buy dollars sent by expatriates with an additional two and a half percent incentive. After the announcement of this additional incentive, the flow of remittances in the country has increased slightly. But that did not reduce the heat of the dollar market. The exchange rate of the dollar against the rupee is setting a new record. At present, it costs 126 to 127 taka per dollar to buy from the open market.
Several dollar buyers recently said that sometimes a few dollars are needed for urgent needs. Dollars are not available at the bank at the right time. Then you have to go to the open market and buy at a much higher price. Sometimes 130 rupees for one dollar is not enough to get a dollar.
Earlier, the price of the dollar rose to a maximum of 120 rupees in August 2022. After several months, the price of the dollar was on the decline. However, at the beginning of October this year, the price of the dollar rose to Tk 120 in the open market. However, breaking all the past records, the dollar price hit a new high of 126 to 127 taka. Meanwhile, banks are not obliged to give additional incentives. If the bank wants to buy expatriate income then it can give this incentive. This new decision has had a positive impact on remittance flow. Expatriates sent 197.75 million dollars in the month ended October. 134 million dollars came in the previous month. In other words, the expatriate income has increased by 63 million dollars within a month. Bangladesh Bank held a meeting with economists and other stakeholders to deal with the crisis. Last November 8 former governor of Bangladesh Bank. The current governor Abdur Rauf Talukder met with Farasuddin. Former governor Dr. Farasuddin said that Bangladesh Bank has delayed taking necessary measures to control inflation. The measures taken should have been taken earlier. Besides, the former governor has suggested the proper implementation of the steps taken to control the hundi.