Kerb market can charge Tk1 above bank dollar selling rate

Money changers can charge a maximum of Tk1 per dollar on top of the selling rate at banks, it was learnt after a meeting at the Bangladesh Bank today (12 May).

Banks say they are currently selling cash dollars at an average rate of Tk117.5. This means money changers can charge up to Tk118.5. However, the dollar purchase rate for money changers remains open.

On 8 May, the central bank introduced the crawling peg mid-rate at Tk117 per US dollar, up from Tk110, permitting the market to determine the exchange rate within a Tk1 margin – above and below.

Deputy Governor Kazi Sayedur Rahman, along with senior officials of the central bank, verbally set the rate for the kerb market on Sunday during a meeting with the leaders of the Money Changers Association.

The cash dollar traded at Tk117-120 in the kerb market on Wednesday. However, the rate skyrocketed to Tk125 on Thursday, just a day after the massive depreciation of taka, prompting the regulator to step in. Following the meeting with the central bank, the dollar was sold for Tk120 in the kerb market on Sunday.

According to several sources present at the meeting, the Bangladesh Bank wanted to know from the leaders of the Money Changers Association the reason for the jump in the dollar rate in just a day.

In response, the leaders said this occurred because the central bank increased the official rate of the dollar by Tk7 by introducing the crawling peg. The central bank did not accept the association's argument as the rate grew only by Tk2 in banks following the devaluation of the taka.

Md Mezbaul Haque, spokesperson for the Bangladesh Bank, said, "We do not see any reason for such a large difference in the dollar price in the kerb market."  

Banks now have more than $51 million in cash, which once plummeted to $8 million, he said, stating that banks do not have a shortage of cash dollars right now. "We have not directly fixed any rate for the money changers, but suggested they exercise restraint," he added.

A senior official of the Money Changers Association said banks are offering a remittance rate of Tk117. With the additional 2.5% government incentive, customers are receiving around Tk120 per dollar.

"However, we have been asked to sell cash dollars at Tk118.5. It does not make sense," he said, adding that if the rate is pegged this way, the possibility of money laundering will increase.

Money changers flag hundi alarm

The official also said at least several lakh people are going abroad for various reasons, including Hajj, in the next few days. A large number of them do not carry dollars endorsed in their passports and instead transact in hundis. This is clearly indicative of money laundering, and measures need to be taken to stop it.

Last Thursday, the Money Changers Association wrote to the Bangladesh Bank, Bangladesh Financial Intelligence Unit, National Security Intelligence, National Board of Revenue, and law enforcement agencies, urging them to take action to prevent the carrying of dollars without endorsement.

In the letter, they wrote, "More than 4 lakh Bangladeshis go to Saudi Arabia during Umrah and Hajj. These individuals pay the government management expenses, including airfare and visa fees, in taka. Additionally, expenses such as hotel rent, food, sacrificial animals, and other necessities in Saudi Arabia also need to be covered. To our knowledge, currently, no foreign currency endorsement is made in the passports of Bangladeshi citizens performing Umrah and Hajj."

In this case, Bangladeshi citizens going to Saudi Arabia are requested to take the necessary measures to determine the amount of expendable foreign currency and endorse it through legitimate money-changing companies.

MS Zaman, president of the Money Changers Association of Bangladesh, stated, "We are always committed to complying with central bank directives. We have informed the members of the association accordingly, as the central bank has requested to fix the cash dollar rate."

Additionally, this business leader demanded that the money changers' dollar endorsement limit be increased from $1,000 to $3,000.