BB loses Tk 55cr in forex deals with Islami Bank

The Bangladesh Bank has incurred a loss of Tk 55 crore from its foreign exchange deal with Islami Bank centring the introduction of the crawling peg exchange rate system.
As per its commitment to the International Monetary Fund, the central bank on May 8 announced the crawling peg system (a band of rates within which the exchange rate of a currency is allowed to fluctuate).
On May 9, the reserve management and investment unit of the central bank made two dollar buy and sell deals, amounting to $82 million, with the Shariah-based bank, where S Alam Group holds controlling stakes.
But the date of the transactions was shown to be May 8, found a central 
bank inspection report.
When Bangladesh Bank announced the crawling peg exchange rate system, the exchange rate of the dollar jump to Tk 117 from Tk 110.
The loss occurred because the central bank sold dollars at Tk 110 to Islami Bank but bought them from the bank for Tk 117 per dollar, the report said.
The forex deals were done by two BB officials to help Islami Bank, The Daily Star has learnt from officials informed with the proceedings.
The two officials sold and bought dollars after the crawling peg system kicked in, the officials said on the condition of anonymity as they were not authorised to talk to the media.
The reserve management and investment unit of the central bank could not provide any proper explanation for the forex deals, the inspection report said.
The inspection also unearthed that the signatures of the additional director and director of the Forex Reserve & Treasury Management Department were missing on documents of the deals.
This is a violation of the “reserve management operation manual” of the central bank, the report said.
As per the manual, a copy of the note of the forex deals has to be sent to the mid-office and back-office branches, which was not done.
Contacted, BB spokesman Md Mezbaul Haque said, “The officials of the Forex Reserve & Treasury Management Department of BB are not interested in talking about the issue right now.”
Islami Bank Managing Director and Chief Executive Officer Mohammed Monirul Moula did not respond to phone calls.