Dollar rate rises to Tk123.10 amid payment pressure

The dollar rose to Tk123.10 today (17 June) as increased import payment demand and a decline in remittance-driven dollar supply put pressure on the foreign exchange market, according to senior officials at several commercial banks.

Bankers said several banks purchased dollars from remittance houses at rates ranging between Tk123 and Tk123.10 during the day. Similar rates were also observed in the interbank market.

A senior official of a private commercial bank told The Business Standard that the rise in the dollar rate was driven by two key factors.

"Payment pressure has increased, while dollar supply has fallen due to the unrest at Islami Bank," the official said.

According to bankers, Islami Bank Bangladesh is the country's largest remittance-collecting bank and typically supplies around 80% of its remittance dollars to the market. However, remittance inflows to the bank have declined somewhat since the beginning of the month amid ongoing unrest, reducing the overall supply of dollars in the market.

At the same time, banks are facing significant payment obligations for letters of credit (LCs) opened for various government imports, creating additional demand for foreign currency.

Despite the recent increase, senior banking officials expressed optimism that the dollar rate may ease in the coming days if supply conditions improve.

Meanwhile, Bangladesh Bank today verbally instructed banks not to purchase remittance dollars at rates exceeding Tk122.75, according to banking sector sources.

Economists, however, argue that the central bank should refrain from informal interventions aimed at influencing exchange rates and instead allow market forces to determine the value of the dollar.

Since July last year, Bangladesh Bank has been purchasing dollars from commercial banks as part of its foreign exchange management strategy, a practice that continues to date.