Greenback to stabilise soon: Says bankers’ assoc chief

The exchange rate of US dollar will be stable soon, according to the chairman of the Association of Bankers Bangladesh Limited, as the Bangladesh Bank has taken some major initiatives to cool off the country's foreign exchange market.

"Price of many essential commodities including petroleum have started to calm down in the international market. We expect prices in the local market will start to decline in the next one to two months," bankers' association Chairman Selim RF Hussain told a press briefing on Thursday.

"Stability does not necessarily mean that the dollar would drop to Tk84. Rather by market stability, I mean a steadier rate of the greenback," Selim RF Hussain, who is also the chief executive officer of Brac Bank, told the media briefing at Brac Bank headquarters in Dhaka.

He said he cannot predict what the exchange rate would be, as it totally depends on demand and supply.

Dollar demand in the country's banking system has been on the rise from the very beginning of the financial year 2021-2022. A high import payment-induced record surge in trade deficit was responsible for the dollar market instability.

Besides, some countries were facing a financial crisis that reduced export orders of Bangladesh and resulted in rising production costs. The remittance inflow was in a downward trend also.

But Selim RF Hussain claimed fragile confidence in the interbank dollar exchange platform and profiteering by a vested quarter amid the dollar volatility basically destabilised the foreign exchange market.

The exchange rate of the US dollar on the kerb market stood at Tk 108 on Wednesday after reaching Tk112 on the previous day while the rate in banks was as high as Tk107 on Wednesday.

"The interbank dollar exchange is almost off now. It has to be resumed to help ease the crisis," said the bankers' association chairman.

He commented that it is not possible to let the dollar market completely free-float in countries like Bangladesh.

He noted that the dollar market will be normal if the interbank dollar exchange platform is operational, confidence in the platform is restored and the measures by the central bank are implemented properly.

'Relaxed loan rescheduling will help reduce defaulted loan'

At the press conference, Selim RF Hussain claimed the central bank's recent policy relaxation for rescheduling big defaulted loans will ultimately ensure accountability and good governance in the banking sector.

"The new rescheduling policy is a quantum leap, he commented, adding loan rescheduling is a common practice in all countries.

"But no country's central bank directly handles it. Borrowers are known by the respective banks, not the central bank. Rescheduling is not a task for the central bank, rather a job for the bankers," he said.

Due to the new central bank guidelines, the bankers' association chairman said loan rescheduling, which used to take 3-4 months, will now take only 7-10 days.

"If the banks have good governance and efficient manpower, then surely they will perform better after the central bank's rescheduling policy relaxation."

He said the central bank governor has asked them to pay special attention to control inflation and maintain the overall stability of the financial sector. He also ordered zero tolerance to irregularities.

Selim RF Hussain said he does not agree that the rescheduling policy relaxation is a "big offer for big defaulters". Rather he interprets the move as "more responsibility for banks".

The bankers' association chairman believes the pressure on banks for long-term loans is increasing due to the weak capital market.

He said, "Banks mainly provide short-term loans. They disburse working capital for a maximum period of two-three years. But many businesses are becoming dependent on banks for long-term loans, which is basically possible in the bond market or capital market."

At the press conference, he thanked the central bank governor for announcing a Tk25,000 crore refinance scheme for the micro and small ventures.