The foreign exchange reserves slumped to US$2.829 billion on Sunday from $2.9 billion on July 16. The reserve was $3.169 billion on July 14. But, a $353 million bimonthly payment to the Asian Clearing Union (ACU) has resulted in the greenback fall.

Sources said as the Bangladesh Bank is releasing dollar to the commercial banks on a limited basis to meet the banks' demands, the forex reserve is witnessing a downslide.

Banking sources said the central bank yesterday sold around $3 million to three commercial banks.

Dollar price in the inter-bank market was Tk 65.25 while its price for import hit Tk 67.25 yesterday.

The Association of Bankers Bangladesh (ABB) is yet to reach a decision on an acceptable exchange rate of the greenback for inter-bank transaction. Earlier on July 28, in a bid to stabilise dollar price, the ABB decided to exchange the greenback from yesterday (Monday) at a rate, which would be acceptable to all banks.

Some 10 managing directors from major market player banks at a meeting, chaired by M Tahminur Rahman, managing director of Sonali Bank, yesterday noted that all the banks may not accept the fixed exchange rate of dollar.

The meeting also considered a number of proposals such as keeping the price of dollar between Tk 65 and Tk 66 in the inter-bank transaction. The meeting also proposed that the price difference for the inter-bank transaction should not exceed 25 paisa for per unit.

Besides, in the case of remittance, NCBs and PCBs will maintain equal rate and foreign banks will also have to follow this margin. If any foreign bank fails to maintain this, no local banks will transact with them, the meeting proposed.

The proposals will be tabled today at a meeting of the Bangladesh Foreign Exchange Dealers Association (Bafeda) so as to take a decision on the acceptable rate of the greenback.

A commitment made to International Monetary Fund (IMF) prevents Bangladesh Bank (BB) from interfering in the foreign exchange market and taking any direct measure to halt the ongoing dollar price hike.

Sources said following the first-ever meeting of the high-powered fiscal co-ordination council early last week, where the dollar price spiral featured prominently, the BB took some indirect steps to stabilise the forex market.

As per central bank's informal instructions, Bafeda and ABB held meetings on the issue and took a number of decisions to rein in price spiral, sources said.

However, managing director of a private bank said, "In the free market economy, bodies like Bafeda or ABB cannot take such decisions to fix the buying and selling rates of dollar, which would be acceptable to all."

The ADB Quarterly Economic Update, which was released on Sunday, said higher oil prices in the international market have poised major risks on the balance of payments. The higher oil price has reduced the foreign exchange reserve available for other essential imports and put pressures on the reserves and the exchange rates.

The quarterly said the exchange rate experienced increased pressures and exhibited significant volatility due mainly to the rapid growth in imports relative to export growth, aided by the sharp rise in private sector credit. This resulted in the taka depreciating by about five percent between December 2004 and June 2005.