Dollar price rises up to Tk 125 in kerb market

Exchange rates reached as high as Tk 125 per US dollar in the informal kerb market yesterday from around Tk 117 the day before, owing to demand exceeding supply.

The development came about a day after the Bangladesh Bank (BB) introduced the crawling peg, a flexible exchange rate system, ending its grip on the exchange rate.

Banks, however, mostly charged importers Tk 117.5, reflecting stability following the sharpest single day depreciation of 6.36 percent from Tk 110.

Bankers said the exchange rate was already hovering at around Tk 117 unofficially, meaning the impact of easing the restrictions was yet to come about in the forex market.

"We have not seen volatility in the market today," said a top official of a private bank.

Three more bankers echoed that sentiment.

They said they bought the greenback at Tk 116.5 from exporters and sold it at Tk 117.5 to help businesses settle import bills.

The BB said the highest interbank purchase rate was Tk 116.46 while the selling rate was Tk 117.5 yesterday. The weighted average rate was Tk 117.36.

"It is too early to comment on the market. However, it was stable today. It was almost like a free market situation," said the chief of treasury of a leading private bank.

Although the market behaved erratically in the early hours of yesterday, the rate later stabilised.

Imports have fallen and this has cut the appetite for US dollars, said the second banker. Central bank data shows that imports fell 15.36 percent year-on-year to reach $40.88 billion in the July-February period of fiscal year 2023-24.

"Once buyers were ready to pay any rate. Now it seems that demand is not very robust. It is rather slow," said the third official of another private bank.

However, supply was tight in the kerb market as many opted out of making sales.

Mostofa Ahmed, owner of Suganda Money Changer, said the US dollar has become dearer due to heightened demand.

The official exchange rate went up by Tk 7 overnight and people expect it to rise further in the future, he said.

Helal Uddin, another money changer at Motijheel, said he has stopped trading the American currency in the kerb market at the increased rate.

"If we trade dollars at higher rates, law enforcement agencies will impose fines," he said.

Another trader, seeking to remain unnamed, said most of the transactions in the kerb market took place at Tk 121-Tk 122 per US dollar.