Increasing dollar price by Tk 7 not a positive sign

Staff Correspondent: Businessmen and economists do not see the increase in the dollar price by Tk 7 as a positive thing. They say that just as there is no upside to holding back the dollar market, there is no justification for raising prices too much at once.
They are of the opinion that if the price is gradually increased, there would be no instability in the market. Although Bangladesh Bank officials say that this will reduce the gap with the open market. Bangladesh Bank on Wednesday (May 8) introduced the new exchange rate system or Crawling Peg Mid-Rate (CPMR). In this, the price of the dollar has increased by 7 rupees. Now the official price is Tk 110 to Tk117. In this, the value of the taka decreased by 6.3 percent. Economists do not see any positive side of increasing prices at once.
The exchange rate of the US currency was reduced by Tk 1 in three rounds last November-December to bring back the dollars held by the customers in the market. It was reduced by 50 paisa per dollar on November 23 and 25 paisa per dollar on November 29. And in December it was reduced by another 25 paise. From December 17 of the year, the exchange rate of taka against the dollar was the highest of Tk 110 in bank. Although traders have been complaining that they had to spend Tk 115 to Tk 116 to buy dollars from the bank at the import level.
On January 1, 2020, the rate of the US currency was Tk 84.90. A year later, on January 1, 2021, the price decreased by 10 paisa to Tk 84.80. This was followed by a massive devaluation of the rupee against the currency. On January 1, 2023, the rate of the currency rose to Tk 105. And on January 1 of this year, the price of the currency rose to Tk 110. Last Wednesday (May 8) the price was increased by Tk 7.
In this regard, the former chief economist of the World Bank Dhaka office Zahid Hossain told, “The price of the dollar was increasing. It was not right to keep it for so long. Because the importer never got the dollar at the fixed price. Then the market was upward. Now increasing the rate by Tk 7 at a time will further increase the rate. Because it has to be said that there is an opportunity to increase and decrease one more rupee.
Dr. Zahid Hossain said, ‘Bangladesh Bank rate will be stricter in effect. The market will also be unstable. Because many will want to hold the dollar in the hope of getting a higher price. My fear was about the market system (instability). There is no telling where the dollar rate will settle. Let’s see next week.
The central bank says the dollar’s middle rate is fixed. Here the gap with the open market will decrease. However, the reality of Bangladesh Bank is not reflected in the open market. The price of the dollar increased by Tk 7 in the bank, but it increased up to Tk 9 in the money exchange. On Wednesday (May 8), the buying rate was Tk 114.50 per dollar, selling at Tk 116. On Thursday (May 9), money exchanges were selling at Tk 125 per dollar. Along with the dollar, other currencies have also been affected in the open market.
Deputy Governor of Bangladesh Bank Md. Habibur Rahman told, “I decided the intermediate rate after discussing the actual exchange rate (dollar). Now the dollar rate is stable in the open market. As a result, the open market gap with the bank will not be more than one rupee.
Advisor to the former caretaker government AB Mirza Azizul Islam said, “Dollar rate of Tk 117 is better if implemented through crawling peg.” However, it was not right to increase the price of Tk 7 in one step. could be balanced. If it was increased gradually, it would not affect the market. There is also a risk of increasing inflation due to a higher increase.
Traders are looking at a sudden increase in the price of the dollar as a negative. It will increase the cost of transportation, the price of goods will increase. Common people will be under pressure.
In this regard, FBCCI President Mahbubul Alam said, “Increasing the dollar price by Tk 7 in a day will create challenges in business. This will benefit the exporters, but the importers will face problems. Naturally, if the cost of imports increases, it will create a negative side in the market. Consumer suffering will increase. Therefore, if all decisions are not made in the light of reality, problems will arise and inflation will be fueled.