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Moneychangers suggest reintroduction of “auction sale” |
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August 23, 2000
Dhaka (UNB) – Moneychangers have suggested reintroduction of “auction sale” of foreign currency to check `hundi’ transfer and encourage official inflow of foreign remittance to raise the country’s poor foreign exchange reserve. Bangladesh Money Changers Association (BMCA) president Kefayet Ullah Masud told a press conference here yesterday (Tuesday) that foreign exchange reserve was US$2.03 billion when the present government assumed power in 1996. He said the reserve came down to $1.62 billion in May this year and 1.4 billion by now. Reintroduction of auction system remains the only option to raise the forex reserve to a safe level, he felt. Masud said foreign currencies remitted by non-resident Bangladeshis (NRBs) were sold in open auction at competitive prices, which encouraged them to remit money only through the official channel till June 1984. The then government later stopped the system and introduced bank-fixed exchange rates, encouraging ‘hundi’ transaction that offers NRBs better rates. Hundi transaction now controls 70-80 per cent inflow of foreign remittance, as wage earners have increasingly become dependent on this unofficial channel, he said. Frequent devaluation would never help increase inward remittance through official channel, as hundi traders always offer higher rate than the official one, Masud said, decrying the government’s logic that devaluation would help increase forex reserve. Foreign exchange reserve grew by 14 per cent in last four years while the value of local currency depreciated by 30 per cent, he pointed out. Masud analysed the performance of different export sectors in recent years to disprove the plea often cited by the government that devaluation would boost export. Earning from all the major export sectors dropped during the last four years except readymade garments and frozen foods, he said, identifying foreign remittance of NRBs as the lone valid source to increase forex reserve. He did not agree with the move to open exchange points of nationalised commercial banks (NCBs) abroad to help improve the scenario. The existing exchanges of NCBs abroad are rather patronising hundi business, he alleged. Masud demanded establishment of “money exchange floor” like Dhaka Stock Exchange to facilitate money traders to exchange their stocks on account-to-account transaction basis. He also sought permission for moneychangers to receive wage earners’ foreign remittance against their (moneychangers) FC accounts. Foreign remittance inflow in the 1999-2000 fiscal year amounted to about US$1.9 billion, of which 40-45 per cent came from Saudi Arabia alone, he informed. BMCA secretary general Abul Hashem and executives Mohammad Faruk and Anwar Hossain were present at the press conference held at the Jatiya Press Club. |