STAFF CORRESPONDENT

Bangladesh has moved to a more flexible, market-oriented exchange rate system, easing pressure on foreign exchange reserves and meeting a key condition tied to a $4.7 billion loan programme with the International Monetary Fund.

The central bank yesterday lifted a Tk 1 spread between buying and selling rates of the dollar by repealing a January directive. At the same time, it reinstated an earlier circular issued in December 2024, allowing banks to “freely” negotiate the dollar rate for both interbank and customer transactions. That marks a formal return to a pricing framework driven by demand and supply.

While not a fully floating regime, the move grants banks wider autonomy in setting rates and reflects a shift toward managed flexibility.

Bangladesh Bank is now expected to step back from daily intervention but will retain the option to stabilise the market when necessary. To that end, it has set aside a $500 million fund to support the foreign exchange market.

“We believe the exchange rate will remain broadly where it is now, around its current level,” Governor Ahsan H Mansur told reporters at a virtual briefing from Dubai yesterday.

“We don’t anticipate any need for intervention going forward. This does not mean the dollar can be sold at any price. We will be able to keep the market-based system operational.”

Mansur also warned that the central bank would take firm action against rogue traders seeking to manipulate the market.

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