Bangladesh grapples with rising dollar prices amid illegal trade | Editor Venkatesh Jartarkar

Published November 11, 2023 at 10:31 a.m. ET

The US dollar crisis in Bangladesh has intensified as the open market rate rose to Tk128 per dollar today, a sharp increase from the rate earlier this week. Despite Bangladesh Bank’s (BB) strict directives and warnings of stiff penalties for non-compliance, banks and money changers continue to circumvent BB’s fixed exchange rates, leading to an increase in illegal currency trading.

On Wednesday, the dollar was already trading significantly above the central bank’s fixed rates, fetching Tk124 in the open market compared to BB’s bid and ask rates of Tk113.75 and Tk115.25, respectively. The gap between official and actual market rates has widened, with reports of illegal transactions occurring in busy commercial areas such as Motijheel, Dilkusha, Paltan and Fakirapool.

BB spokesman Mezbaul Haque confirmed that BB had issued warnings and threatened severe punishment for financial institutions that ignored the official rates. However, these measures have not revealed black market activities, as confirmed by Heller Sikder of the Money Changers Association of Bangladesh. Customers have no choice but to turn to unauthorized dealers who charge exorbitant prices due to the scarcity of dollars at legal exchange points.

This financial turmoil comes amid aviation news where Jin Air, a subsidiary of Korean Air Group, has shown interest in establishing regular direct flights between Bangladesh and South Korea. This move follows Jin Air’s successful operation of 121 direct charter flights over three years between Dhaka and Incheon. The airline’s commitment to maintain reasonable fares for expatriate Bangladeshi workers, even with higher operating costs, underscores its dedication to serving the Bangladesh-South Korea route.

The escalating dollar price in Bangladesh’s open market poses a significant challenge to the country’s financial stability. Authorities are under pressure to curb illegal trading practices and align market operations with official guidelines to prevent further economic strain.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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