Bangladesh central bank insists on fixed dollar rate amid currency crisis

Bangladesh’s central bank has reaffirmed its stance on maintaining a fixed exchange rate for the US dollar, as part of its ongoing efforts to stabilize the local currency and manage the dollar crisis that has intensified since the start of the financial year 2022-2023. Today, Bangladesh Bank (BB) engaged with representatives from leading foreign exchange entities, including Western Union (NYSE:) and MoneyGram, to reinforce a directive that caps the purchase rate of US dollars from remitters at Tk 116.

The move follows a series of measures aimed at controlling the surging demand for US dollars in the country. BB governor Abdur Rauf Talukder announced transaction limits for money changers today, setting a buying price cap at Tk 115.5 and a selling price at Tk 117 each. This decision comes in response to recent fluctuations in the exchange rate, which saw the dollar surge to Tk 124 in banks and even higher to Tk 128 on the informal market between November 8 and 9.

The volatility prompted intervention from BB, which held meetings with the Association of Bankers Bangladesh (ABB (ST:)) and the Bangladesh Foreign Exchange Dealers’ Association (BAFEDA). During these discussions, banks were mandated to comply with an interbank dollar rate set at Tk 111 by ABB and BAFEDA on November 8. However, money changers expressed difficulties in obtaining dollars at these rates, leading to a spill-over effect into the informal market where demand has significantly increased.

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