Zarif Mahmud: The dollar is still the ‘thorn in the neck’ of traders. They are not able to generate dollars according to demand. This is causing problems in the import of essential products including industrial raw materials. With the increasing availability of dollars, opening of LCs increases the value of the dollar. Many small business owners are forced to close their businesses. Meanwhile, at the beginning of this month, ABB and BAFEDA have increased the price of the dollar.
Increasing the price of the dollar will have a direct impact on imports and exports. Which will affect the consumer as well. The cost of importing goods will increase. Although exporters are getting more money now than before. However, importers and exporters are not looking at the devaluation of rupees against the dollar. According to them, it is good for everyone if the price of the dollar comes to a rational level. To solve the problem, economists are talking about setting a single exchange rate in dollars, stopping money laundering and collecting revenue.
In the last one year, the expenditure against one dollar has increased by Tk 16.50. In June last year, traders spent around Tk 92 per dollar, which has increased to Tk 109 in August this year. Many small and big traders are unable to sustain their business due to abnormal cost increases.
Talked with Nawabpur businessman Anwar Hossain. The businessman, who is an importer, said that earlier there was a problem in opening the LC due to the dollar crisis.
The cost of opening new LCs has increased due to the increase in dollar value. This is affecting the market. 25 percent or more price increase in electrical goods. It is better if the dollar rate is at a tolerable level.
Bappi imported goods from India and China. He told Daily Industry that on one side there is a dollar crisis and on the other hand the price of the dollar is high. Due to these two reasons, our business has become sluggish. Many are going out of business. However, to solve the crisis, the supply of dollars should be increased at a uniform rate. It will reduce the price of all products, especially the price of imported products.
From this month remittances have been rescheduled by increasing the dollar price. The dollar value of export earnings has also increased. As a result, exporters will get Tk 109.50 per dollar from now. Until now, which was Tk 108.50. And in the case of remittance, 50 paisa has been increased to Tk 109.50. Till now it was Tk 109. In addition, the dollar rate for import will be Tk 110. What was earlier was Tk 109.50.
Chairman of Bangladesh Foreign Exchange Dealers Association (BAFEDA) and CEO of Sonali Bank Afzal Karim told Daily Industry that efforts were being made to unify the export and remittance rates for many days. It will be effective from now on. From September 1, there is no difference in the dollar rate for encashment of remittances and export bills. Exporters will be more encouraged.
However, due to the increase in the dollar rate, exporters will get a little more money, but many say that it will be kept at a tolerable level. Salam Murshedi, the former president of BGMEA, told Daily Industry, “Even if the price of the dollar increases, the entire amount goes to back-to-back LCs.” Everything is expensive. It is better if it is kept at a good level. No one can put a price on it. Monitoring has to be done.
Fazle Shamim Ehsan, Vice President of BKMEA and Managing Director of Fatullah Apparel talked about the increase in dollar price. He told Daily Industry about the profit and loss if the price of the dollar increases, “All the dollars go away in back-to-back LCs.” Again, the amount of money that is due to the increase in the price of things, due to the increase in the price of the dollar, it again goes to the traders. As a result, if the profit increases by two percent, it is actually not very good for the country. If there is a balance, it is convenient to do business.
The businessman said that due to the increase in the dollar rate in the bank, he can now reduce the amount of dollars that he could import by 30 percent. Many problems have arisen. If you want to buy a new machine, you have to pay a lot.
LC opening reduced due to dollar problem. According to the latest data of Bangladesh Bank, in the first month of the current (2023-24) financial year i.e. July, $4.37 billion worth of LC has been opened for the import of various products. This is 31.19 percent less than the same period (July) of FY 2022-23. LC settlement decreased by 20.14 percent. In July of the current financial year, $ 7.49 billion of credit letters or LCs were settled, in the same month (July) of the last fiscal year, $ 5.98 billion were settled.
Dr. Mohammad Farasuddinformer governor and economist spoke about these issues. He told Daily Industry, ‘Back to back LCs in exports have benefited the RMG sector. There is no duty on it, they are getting benefits from the eighties at the official rate. There are three/four things to keep in mind about the dollar. Multiple rates will not work in this. Here one rate for import, one rate for export, separate rate for remittance – these will not work. There should be a single rate, which runs the world.
The former governor said, we have calculated the real exchange rate on behalf of the central bank and set a dollar rate on that basis. Failure to depreciate the rupee for 10 years causes huge losses. India has done 77 percent depreciation in ten years, we have done 27 percent. It made my money overvalued, my exports were not competitive. Importers then preferred because they bought dollars at a lower price.
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