DHAKA: Bangladesh central bank has ordered six banks to transfer their treasury heads to human resources departments over their role in the volatility in the country's foreign exchange market.The...
DHAKA: Bangladesh central bank has ordered six banks to transfer their treasury heads to human resources departments over their role in the volatility in the country's foreign exchange market.
The banks are Standard Chartered Bangladesh, Brac Bank, Dutch-Bangla Bank Ltd, The City Bank, Southeast Bank, and Prime Bank, said the central bank officials.
The Bangladesh Bank sent letters to the six banks, asking them to transfer their treasury chiefs, said the BB officials.
They said the treasury chiefs helped their employers make excessive profits by cashing in on the ongoing volatility in the foreign currency regime, which saw the exchange rate of dollar shoot past taka (Bangladeshi currency) 110 amid a shortage of greenback.
Seeking anonymity, a BB official said the banks purchased dollars from exporters at a lower rate but sold them at a much higher rate to importers.
For instance, importers are now paying banks up to taka 112 buy a dollar whereas banks are buying it for taka 94."This helped the banks make a hefty profit by taking advantage of the ongoing instability in the forex market," the central banker said.
Recently, exporters, importers and business leaders have publicly accused banks of making excessive profits. Banks in Bangladesh have to sell and buy dollars based on the inter-bank exchange rate of the USD set by the central bank.
As per the banking norms, lenders are allowed to offer taka 1 less from the interbank rate while buying dollars from exporters. They can sell greenback, adding taka 1 to the interbank rate.
The BB move comes as the volatility in the foreign exchange market shows no sign of slowing down though the BB has already taken a set of measures amid fast-depleting international currency reserves.
Higher imports, lower-than-expected export receipts and falling remittance have sent the reserves below $40 billion at present compared to more than $48 billion in August last year.
The taka has lost value by more than 12 percent against the dollar in the interbank market though the platform does not account for a major portion of dollar transactions.
This is because the interbank exchange rate does not reflect the reality since the BB has maintained an artificially higher rate of the taka. If the platform were free of BB intervention, the exchange rate would have been much higher as it would be determined by demand and supply. Importers are being forced to pay taka 112 per USD now, up 30 percent from a year ago.