BB signals market-led dollar pricing as governor rules out near-term foreign exchange intervention
Bangladesh Bank says the exchange rate will be determined by market forces of supply and demand as it moves towards a more flexible foreign exchange regime, while urging banks to avoid manipulation.
Bangladesh Bank (BB) will not intervene in the dollar exchange rate in the near term, with the currency instead expected to be determined by market supply and demand, the central bank governor told treasury heads of banks at a meeting today (19 May).
A senior Bangladesh Bank official, who attended the meeting, confirmed the development to The Business Standard, saying the governor sought a clearer understanding of foreign exchange market operations and listened to bankers' concerns over current dynamics.
According to the official, the governor informed bankers that the central bank would no longer dictate the foreign exchange market and that exchange rates would be allowed to adjust based on supply and demand conditions.
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He also said the regulator is working towards a more market-based foreign exchange regime. At the same time, the governor cautioned banks against any attempts to manipulate the dollar market.
However, a deputy managing director (DMD) of a private commercial bank told TBS that Bangladesh Bank had intervened in the foreign exchange market between March and April this year.
He alleged that during that period, central bank officials contacted banks and informally indicated a ceiling for dollar exchange rates.
