Forex brokers fall victim to coronavirus scare
Dark clouds are brewing on the horizon for money exchangers in Dhaka as coronavirus-induced international flight postponement has led to a drastic decrease in their customer numbers, causing exchange rates to fall.
Travel deferrals, notably those involving China, Italy and the US, led to lesser demand for various currencies, especially the US dollar. Lower demand naturally causes exchange rates to fall.
All these spell trouble for foreign currency brokers as they profit adjusting the exchange rates.
The rate of the US dollar fell by Tk 0.60 to Tk 0.70 in the past week. Yesterday, one US dollar sold for Tk 87.20 and was bought at Tk 86.20 in the open market, down respectively from Tk 87.80 and Tk 86.80 just a couple of weeks ago, market players say.
However, the fluctuations are yet to reach banks. The Bangladesh Bank website showed that the buying and selling rates were the same at Tk 84.95 yesterday.
The sales and purchases of the US dollar declined drastically for the flight suspensions, said Safat Al Islam, manager of Talukder Money Exchange House in the Bashundhara City Shopping Complex.
Its daily customer numbers dropped by around 60 per cent in the last one week although it is one of the top service providers and the teller station is situated at a prime location in the city, he said.
Just 10 days ago, hundreds of people had been seeking services daily but that reduced significantly, he said.
However, he held back from disclosing the amount of US dollar traded at the exchange house on an average every day, citing business policies.
Customers are not coming over for the fear of contracting the coronavirus through movement outside, said Md Rafiqul Islam, director of Rainbow International Linkage in Dhanmondi.
While people are refraining from going abroad, the government yesterday put a bar on entry to the country as a preventive measure against the outbreak.
State-run Biman has so far suspended flights to 11 out of 18 international destinations it serves and more routes could be cut as the coronavirus pandemic continues to ravage countries across the globe.
It suspended flights to Muscat, Dammam, Madina, Jeddah, Riyadh, Kolkata and New Delhi, Kuwait, Qatar and Kathmandu. Bangladesh is now allowing flights from only four countries, namely the UK, Singapore, Thailand and the UAE.
At least 28 foreign airlines served Dhaka with 65 flights a day but now the number has come down to about 30.
According to Rafiqul, they had been trading at least $5,000 every day before the coronavirus hit Bangladesh. It has now come down to $800 to $1,000.
A fluctuation of Tk 0.20 to Tk 0.30 is a regular phenomenon for the exchange rate of the US dollar but now it is experiencing a downward trend, he said.
"We are worried about the downward trend of the business. If the present situation continues for another couple of weeks, the money exchangers will face big challenges."
There are 238 licensed money exchangers in Dhaka city dealing with hundreds of thousands of dollar daily and providing good sums in tax and value-added tax to the government, according to Rafiqul.
The exchange rate of the US dollar has started dropping since the end of February due to the flight postponement, said Imamul Hasan, managing director of JBECO Money Changer in Uttara.
Normally, his firm exchanges on an average $90,000 to $100,000 per month. Now it will be at best $10,000 by the end of this month, he said.
"It will be tough for me to pay the salaries to employees and the rent of the shop if the existing situation lingers for the next two weeks."
The rise and fall in the exchange rate is part of the business but if customers stayed put, the exchangers would find it tough to balance everything out, Hasan said.
Abdur Razzak, manager of Jamie Money Exchange in Gulshan, did not trade any dollar yesterday. His prime customers are officials of corporate houses who deal handsome amount regularly for their official trips abroad.
"Now they are not coming. We are worried and in uncertainty," he said.
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