Bangladesh Bank spokesperson Md. Serajul Islam on Tuesday blamed the extreme volatility in the forex market in recent months on the global strength of the dollar against almost all currencies.

“Not only in Bangladesh but also in neighboring countries, the price of the US dollar has increased. In many South Asian countries, it is higher than it is in Bangladesh,” he said.

Serajul Islam, also executive director of the BB, said this in a briefing for a group of reporters on decreasing remittances and export earnings in the last month.

The inward remittance flow in September may have fallen due to the situation over the exchange rate, with a significant volume being diverted to the kerb market in search of a higher rate for the dollar, he believed.

Year on year, Bangladesh’s inward remittances dropped by 10.84 percent to $1.54 billion in September, the third month of the 2022-2023 fiscal, from $1.72 billion in the same month last year. It was the lowest inflow of remittances in 7 months.

The drop was even steeper, almost 25 percent, in comparison to the previous month (August 2022).

It followed a decision by banks on September 11 to pay a maximum of Tk 108 for each dollar to foreign exchange houses (like MoneyGram and Western Union, through which most expats send money). Prior to that, they had offered exchange houses up to Tk 115 for a dollar.

The Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealer’s Association (BAFEDA) were tasked to come up with the rate by the central bank, as an alternative to Bangladesh Bank frequently intervening in the market to set the rate, usually by selling dollars to support an artificially overvalued rate for taka.

But the “strongest dollar in a generation”, witnessed over the last year or so and likely to persist well into the foreseeable future, was starting to make the prevailing system very expensive to maintain for Shapla Chattor. The new system, meanwhile, would seem to be still going through ‘teething problems.’

Serajul Islam however said today that the price of the US dollar “is normalizing with the initiative of the central bank”.

“Bangladesh Bank should not provide any dollar support to the market. BAFEDA and ABB are also playing a role in overcoming the dollar crisis. Currently, the volatility of the dollar has also decreased somewhat,” he said.

The spokesperson said Bangladesh has to emphasize this issue by increasing export income.

“To that end, businessmen have to work to establish Bangladesh as a brand in the global market. If we can do this, this crisis will end quickly,” he added.