The country was suffering from dollar instability and crisis for a long time. It is not completely gone yet. However, after more than two and a half years, there has been some relief in the foreign exchange market.
After the crawling peg system was introduced for the first time last year, there was an initial spike in the dollar, but the situation normalized within a few months. As the supply of dollars to the banks started to increase, the foreign exchange market regained confidence. That is why the central bank is also moving partially out of its regulatory measures to relax the conditions of import of goods.
In the month of October this year, the amount of dollar deposits of commercial banks as open foreign currency with Bangladesh Bank was 941 million dollars. It was $769 million and $864 million in August and September respectively. That is, the month of October has increased by about 172 million dollars compared to August.
In addition, the amount of dollars kept in banks' own vaults has also increased. Compared to January this year, the dollar kept in the vault increased by 21 million dollars or 75 percent in October. However, the general limit of cash dollar deposits of banks is a maximum of 118 million dollars. However, the figures reflect a gradual improvement in the country's foreign exchange market, indicating an easing of the crisis as opposed to an increase in dollar supply.
Bangladesh Bank spokesperson and executive director Husne Ara Shikha told today's newspaper that the benefits of crawling pegs have started to be observed now. Currently there is no 'anything' in the dollar market. The supply of dollars to pay LC bills is higher than before, as well as the amount of cash dollars. He also commented that this is a positive stage for the country to reach economic stability.
These promising changes are mainly due to some special measures. On the one hand, Bangladesh Bank is conducting strict surveillance to maintain control over the dollar market, so that no bank tries to manipulate or increase the price. On the other hand, strict monitoring has been conducted on the import and export of goods, through which it has been possible to prevent the smuggling of dollars to a large extent.
In addition, banks are offering up to 7 percent interest on customers depositing dollars as RFCDs (Resident Foreign Currency Deposits), thereby increasing the tendency of the common man to deposit dollars in banks. In particular, citizens are opening RFCD accounts in various foreign currencies including US Dollar, Pound, Euro, Australian Dollar, Canadian Dollar, Singapore Dollar and depositing it in the bank. According to the treasury chiefs of private banks, the facility of depositing foreign currency up to 10,000 dollars in RFCD account is provided. There is also an opportunity to earn profit as there is interest on it. Because of this, the amount of cash dollars with the commercial banks is increasing. Banks' dollar holdings reached $3 billion in October, an increase of nearly $284 million from September.
Syed Mahbubur Rahman, former chairman of Association of Bankers Bangladesh (ABB) and managing director of Mutual Trust Bank, said, 'The unstable situation with the dollar has now been overcome. He said, “Now the situation is quite normal, but some outstanding bills of government banks still remain.”
Syed Mahbubur Rahman also said that if the outstanding bills of the government banks are fully paid, there will be greater relief in the country's dollar market and the situation will be more stable. Through this, the dollar-crisis will further decrease and the supply of dollars to the banks will increase, which will be positive for the economic environment of the country.
According to the report, the dollar amount of the commercial banks of Bangladesh in the account of foreign banks in October this year was 2 thousand 39 million dollars, which was 1 thousand 967 million dollars and 1 thousand 831 million dollars in the months of August and September respectively. That is, compared to August, the dollar amount of Bangladeshi commercial banks increased by about 75 million dollars according to foreign banks in October. In addition, the total dollar amount of commercial banks in the three categories stood at 3 thousand 31 million dollars in October, which was 2 thousand 747 million dollars in September. According to this calculation, about 284 million dollars have been raised in one month. As a result, dollar supply to banks has also increased, which has helped to restore stability and confidence in the country's foreign exchange market.
