Amid the ongoing unrest, the availability of cash US dollars in the open market, also known as the kerb market, has suddenly declined, given low remittances and export earnings.
Money changers and retail dollar traders said that the price recently increased due to a decreased remittance via the legal channels.
Insiders said that the ongoing dollar crisis was attributed to various factors, including a significant gap between supply and demand for dollars in the country.
The depletion of foreign exchange reserves, poor inflows of remittances and low export earnings were also contributing to the imbalance in the foreign currency market.
The dominance of the informal “hundi” market, where unofficial currency trading occurs, also plays a role in exacerbating the crisis, according to economists.
Former secretary general of the Money Changers Association of Bangladesh Helal Uddin Sikder was at a loss regarding the reason for the dollar rate hike in the open market.
“I don't understand what the kerb market has to do with remittance or digital dollars. Here the whole transaction is done in cash. It usually comes from travellers. As air traffic is normal, such a rise in dollar prices in the kerb market is unusual.”
If this is ignored now, the condition may worsen, he added.
Regarding the exchange rate, he also said that the difference has increased by Tk3 in just one day.
The open market rate for the US dollar was Tk124.50, though the official rate was Tk118-119.
Ifthakharul Haque, who came to Motijheel to buy some dollars, said that he needed to go abroad for business.
To do that, he visited several money changers in Motijheel, Dilkusha and Fakirapool areas to buy some dollars for essential expenses.
But none of them were selling dollars below the rate of Tk124.50-Tk125.
After much searching, he bought $400 at Tk124.50 apiece.
However, according to a central bank official, Bangladesh Bank on Sunday (July 28) verbally instructed some banks to offer a higher exchange rate for US dollars to lure remitters into sending their income through formal channels.
After that, a good number of them immediately started offering rates of Tk118.50 to Tk119 per greenback upon receiving the instructions from the central bank.
The move comes because of the recent five-day internet blackout affecting remittance collection through banks and mobile financial services (MFS) in the country, which has been suffering from a forex crisis for more than two years now.
Since the introduction of the crawling peg on May 8 to restore stability in the foreign exchange market, the dollar rate increased by Tk7, and the interim rate was set at Tk117.
As a result, the dollar rate remained stable at Tk117 to Tk118 for more than two months. Now it is starting to rise again.
On that day, the dollar price in the open market hit Tk125.
