Bangladesh Bank has issued a directive instructing banks to convert 50% of the dollars held in exporters’ retention quota (ERQ) accounts into cash, aiming to bolster foreign currency liquidity in the market. In a letter sent on Sunday, 8th October, the central bank requested other banks to promptly convert half of the total $639 million deposited in ERQ accounts as of September 21st.
As a result, exporters will receive a rate of Taka 110 per dollar for their retained export earnings. Mr. Selim R F Hussain, the Managing Director of BRAC Bank, expressed his support for this decision, stating, “This is a positive move that will enhance dollar liquidity in the market.”
Banking professionals note that, considering the current circumstances, dollar liquidity has been stable for the past few months. Nevertheless, banks face challenges in maintaining robust liquidity due to reduced issuance of letters of credit (LCs) for imports. This shift is driven by a greater focus on foreign exchange portfolio management, driven by the mounting pressure of deferred payments.
On the other hand, exporters have raised concerns that such decisions by the central bank are made without their consultation and may lead to potential losses in the future.
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