Controlling exchange rate may impact remittance flow: Economists
UNB || BusinessInsider
Expatriates will get a maximum of Tk 107.5 per US dollar instead of previously fixed Tk 108 for remittances from October 1 (Saturday).
The move by the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers Association (BAFEDA) came amid Bangladesh Bank’s efforts to stabilise the forex market.
Some economists, however, said controlling the exchange rate may encourage the use of illegal channels like hundi by remittance senders.
Chairman of Public Research Institute (PRI) economist Ahsan H Mansur told UNB that this is not the right decision to attract more remittances, while the kerb market rate is more than Tk 114.
It may encourage the illegal channel, which is not helpful to normalise the forex crisis, he said.
Professor Mustafizur Rahman, distinguished fellow of think tank Centre for Policy Dialogue (CPD) agreed with Mansur saying that any such control will not help the market when the demand for forex is expanding.
He said several rates for US dollar will create discrimination and will discourage remittance flow, and monetise the export income.
The illegal sector benefits when the exchange rate difference between banks and the kerb market widens, Mustafizur said.
Earlier on September 11, the ABB and the BAFEDA fixed the maximum price of a dollar at Tk 108 for remittance.
But the dollar rate of export income monetisation will remain at Tk 99 per dollar as before. In the case of payment of import liabilities and inter-bank transactions, the price of the dollar will be Tk1 higher than the average price of a dollar bought from expatriate and export earnings.
At the end of the meeting, BAFEDA Chairman Afzal Karim told reporters, “There was supposed to be a price review from time to time to keep the dollar market normal.”
“In continuation of this, we have decided on a new price. The new price will be effective from October 1,” he said.