Bangladesh Bank decides to allow floating exchange rate for dollar

The Bangladesh Bank today decided not to fix the exchange rate of the US dollars, allowing the market to set the price based on demand and supply.

The move aims at restoring stability in the foreign exchange market after the central bank's latest measure did not yield much effect.

Md Serajul Islam, spokesperson and an executive director of the Bangladesh Bank, said that the central bank took the decision as inflow of inward remittances had declined sharply in the last couple of days.

"This has created shortage of the American greenback in the market."

The BB communicated the decision to banks verbally. The move has already come into effect.

The BC selling rate, at which banks sell the dollar to importers, will be determined by the market as well, Islam said.

Similarly, exporters will sell dollars to banks based on the market rate.

The central bank will also declare the interbank rate, the benchmark rate of the taka against the US dollar, Islam said.

The local currency has been facing an acute pressure in the last couple of months due to the soaring import payments.

Against the backdrop, the BB has so far depreciated the taka against the dollar seven times this year alone.

The interbank rate today stands at Tk 89 per dollar, which was Tk 85.80 per dollar on December 30 and Tk 84.80 on June 2 last year.