Thursday, June 20, 2024


Dhaka Tribune

As USD gets expensive, so too will cooking oil and food

Although exports have grown in recent times, it was merely driven by higher volumes, but imports have become both volume and price driven

Update : 22 Mar 2022, 08:24 PM

The selling price of the US dollar (USD) has started rising again, leading bankers and businessmen to believe this could end up affecting the already high prices of essential commodities. 

USD prices rose from Tk86 to Tk90 in the past few days — on Tuesday, the selling price of the dollar at United Commercial Bank was Tk86.25, up from Tk86.05 just a day earlier, while at Mercantile Bank, the selling price had reached Tk90.

Earlier in January, the central bank officially raised the price of dollars from Tk85.80 to Tk86. However, commercial banks in the country usually sell dollars at Tk0.05 to Tk0.10 more than the price set by the central bank. 

This gap has been widening for some time now, with some banks having increased this gap to a maximum of Tk4. But most banks have kept this between Tk0.25 to Tk2.50.

Muhammed Shah Alam, head of Treasury at City Bank, told Dhaka Tribune: “USD prices have started rising again for various reasons. Yesterday [Monday] the dollar price rose to Tk90 on the banking channel, but today it has decreased by Tk0.40-0.50.”

Although exports have grown in recent times, it was merely driven by higher volumes, but imports have become both volume and price driven, he added. 

In the last few months, though the export earnings have increased, imports have also become more expensive. 

So, earlier, if the country imported 2 metric tons of rice, now it imports 2.5 metric tons, which is more expensive than before. In the international market, prices of these products have now gone up by 40-50% in many cases.

Moreover, imports are likely to grow even more ahead of Eid and Ramadan.

On the other hand, Bangladesh Bank is not able to supply enough dollars at the moment. So, banks that have fewer dollars have naturally raised their exchange rates.

Mahbubul Alam, chairman of M Alam Group and President of the Chittagong Chamber of Commerce and Industry (CCCI), wrote a letter to the governor of Bangladesh Bank on March 14, asking the central bank to control the value of USD in order to reduce the cost of importing consumer goods, raw materials and capital equipment during Ramadan.

“Importers have to pay huge amounts of extra money,” he wrote, adding: “In the curb market, the dollar has crossed Tk92. In this context, with the upcoming holy month of Ramadan, huge expenditures are being made on the import of consumer goods. As a result, there is a risk of adverse conditions for the mass people and traders if the existing volatility in the market continues to raise the prices of essential consumer goods.”

As a solution to this, he proposed that the Bangladesh Bank increase the supply of dollars from the reserve.

But remittances have started to pick up speed again. 

According to the Bangladesh Bank, in the first 16 days of this month, expatriates sent $1.03 billion to the country.

A central bank official said they too are worried about the value of USD and are monitoring the market. 

“In fact, the balance of payments is a bit negative. But remittances are starting to increase. If this continues, the expatriate income will exceed $2 billion by the end of March,” he added.

Expatriates sent a significant amount of remittances in the first month of the year due to increased cash incentives. 

But in February, remittances fell to only $1.5 billion, the lowest in the previous 21 months.

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