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Tuesday, July 5, 2011
Business
Dollar getting costlier in informal market
Dollar getting costlier in informal market
Sajjadur Rahman
A widening gap in greenback prices between informal and formal markets is causing fears of a decline in remittance flow through the informal channel.
The dollar is being sold on the kerb market between Tk 77.50 and Tk 78, compared to around Tk 75 for banks and an inter-bank trading rate of more than Tk 74.
According to bankers, usually the spread in dollar prices between the formal and informal markets hovers around
Tk 1 to Tk 1.5.
Sending money through informal channels is on the rise. The rate of the US dollar on the kerb market might have encouraged remitters to send their earnings back home, said a deputy managing director of a private bank who heads its international division.
According to his estimate, around 60 percent of Bangladeshi expatriate workers presently use formal channels to send their money home. But now their number is on the decline.
He explains if a remitter sends $500 through the informal channel, he will get nearly Tk 2,000 more than the bank rate.
Sending money through informal channels might increase in the days to come due to a climbing price of the greenback at the kerb market, the bankers fear.
Bangladesh received nearly $11.65 billion as remittances during the just concluded fiscal year. The growth rate was more than 6 percent though it was in between 13 percent and 32 percent in the past four years.
Though money transfer to Bangladesh through banking channel has become efficient and easy over the years, it is now on a declining trend for a price gap.
Bangladesh Bank Governor Atiur Rahman has admitted the price gap, but said kerb market is not so big here.
The amount traded in the kerb market is not that high, Rahman said.
He said the growing pressure on the greenback was due to a huge rise in imports.
The market will be stabilised soon as we've initiated measures to control imports of unproductive things, said the governor.
Demand for the dollar has been growing since early this year to meet buoyant import bills.
Declining remittance due to unrest in Middle East and a slowdown in manpower export have added additional pressure on the foreign exchange.
A continued devaluation of the taka against the dollar reflects the scarcity of the greenback in the local market. The Bangladeshi currency has been devalued against the dollar by about 5 percent since January.
The dollar traded at Tk 75.20 at customer level in the banks yesterday.
There may be siphoning off of money in the name of treatment, education, and under-invoicing, said a senior treasury official of a private commercial bank. An intelligence report also identified a large-scale siphoning of money earlier this month, according to newspaper reports.
sajjad@thedailystar.net
Business
Dollar getting costlier in informal market
Dollar getting costlier in informal market
Sajjadur Rahman
A widening gap in greenback prices between informal and formal markets is causing fears of a decline in remittance flow through the informal channel.
The dollar is being sold on the kerb market between Tk 77.50 and Tk 78, compared to around Tk 75 for banks and an inter-bank trading rate of more than Tk 74.
According to bankers, usually the spread in dollar prices between the formal and informal markets hovers around
Tk 1 to Tk 1.5.
Sending money through informal channels is on the rise. The rate of the US dollar on the kerb market might have encouraged remitters to send their earnings back home, said a deputy managing director of a private bank who heads its international division.
According to his estimate, around 60 percent of Bangladeshi expatriate workers presently use formal channels to send their money home. But now their number is on the decline.
He explains if a remitter sends $500 through the informal channel, he will get nearly Tk 2,000 more than the bank rate.
Sending money through informal channels might increase in the days to come due to a climbing price of the greenback at the kerb market, the bankers fear.
Bangladesh received nearly $11.65 billion as remittances during the just concluded fiscal year. The growth rate was more than 6 percent though it was in between 13 percent and 32 percent in the past four years.
Though money transfer to Bangladesh through banking channel has become efficient and easy over the years, it is now on a declining trend for a price gap.
Bangladesh Bank Governor Atiur Rahman has admitted the price gap, but said kerb market is not so big here.
The amount traded in the kerb market is not that high, Rahman said.
He said the growing pressure on the greenback was due to a huge rise in imports.
The market will be stabilised soon as we've initiated measures to control imports of unproductive things, said the governor.
Demand for the dollar has been growing since early this year to meet buoyant import bills.
Declining remittance due to unrest in Middle East and a slowdown in manpower export have added additional pressure on the foreign exchange.
A continued devaluation of the taka against the dollar reflects the scarcity of the greenback in the local market. The Bangladeshi currency has been devalued against the dollar by about 5 percent since January.
The dollar traded at Tk 75.20 at customer level in the banks yesterday.
There may be siphoning off of money in the name of treatment, education, and under-invoicing, said a senior treasury official of a private commercial bank. An intelligence report also identified a large-scale siphoning of money earlier this month, according to newspaper reports.
sajjad@thedailystar.net
