Banks today recommended depreciating the local currency by almost 2 taka against the US dollar when submitting their proposals for the interbank taka exchange rate to the central bank.

The Bangladesh Bankers Association (ABB) and the Association of Bangladesh Stockbrokers (BAFEDA) have suggested that the Bangladesh Bank fix the interbank rate at Tk 89.8 to the dollar as opposed to the existing rate at Tk 87 .9 Tk.

They submitted four rates of the taka to the dollar to Governor BB Fazle Kabir.

In accordance with the recommendations of the two organizations, the rate for importers should be set at Tk 89.95 per USD compared to the existing Tk 88.

For exporters it should be Tk 88.95 and Tk 89.75 for money changers, according to the letter.

The banking regulator on Thursday held a meeting with ABB, an organization of chief executives of banks, and BAFEDA, a platform for banks involved in foreign exchange-related affairs, to bring stability to the country’s foreign exchange market.

Banks are now facing a severe shortage of dollars due to surging import payments amid the disruption in the global supply chain.

The coronavirus pandemic initially disrupted the global supply disruption, after which Russia’s invasion of Ukraine deepened the crisis.

Against this backdrop, the Bangladesh forex market started to face a haphazard situation with most banks ignoring the central bank’s instructions.

Although the central bank has set the BC (bills for collection) rate – at which banks sell dollars to importers – at Tk 88, banks mostly ignore the rate and instead charge more than Tk 95-97.

During the meeting, the Bangladesh Bank requested the two organizations to come up with the exchange rates of the taka against the US greenback considering the market demand.

But the BB has asked banks not to offer rates higher than Tk 90 per dollar.