Written by The Banking Post
For the first time of the country’s history, Bangladesh Bank (BB) on Sunday purchased $171 million from commercial banks through an auction to prevent the falling price of the American greenback on the spot market.
The country’s central bank made the intervention after a break of two months to stabilise the forex (foreign exchange) market in this free-floating regime following IMF’s (international monetary fund) prescription as part of its $5.50 billion lending package.
Following the intervention, the US dollar appreciates by around 50 paisa to reach Tk 121.1375 per dollar after Monday’s business hour ends from Tk 120.6708 recorded a day ago.
Under the current formula of the IMF-prescribed market-driven exchange rate regime, the banking regulator can intervene to the forex market if the price of US dollar either overshoots the upper band or touch the floor rate of the existing crawling peg.
Seeking anonymity, a BB official said, they have discussed several occasions for the last few days with the IMF before going for US dollar purchase from the market.
“We want to bring stability in the forx market. That’s why we purchased the greenback from the commercial banks through formal bidding because we don’t allow the exchange rate going down the floor rate,” the BB official said.
The central banker said they bought $171 million from some 18 commercial lenders at rates in between Tk 120 plus to Tk 121.50 a dollar.
The official, however, did not disclose the official band under the prevailing crawling peg mechanism, saying that they keep it secret to monitor movements of the forex market.
The central bank’s latest move came in the wake of a falling trend in the exchange rate of the US currency against the Bangladeshi Taka more than a week following higher inflow of remittances along with export earnings.
According to the BB, the reference exchange rate was Tk 122.7053 per dollar on June 30, 2025. Since then, the downturn continued reaching Tk 120.7670 on Sunday last when the intervention came.
However, the growing inflow of foreign currencies thanks to remarkable growth in remittance and export receipts continues to increase foreign currencies holding or NOP (net open position) in banks.
According to the BB data, the NOP reached nearly $1.2 billion last week. Not it dropped to over $1.0 billion after the BB’s dollar buy from the banks.
