Written by The Banking Post
In a rare market intervention, Bangladesh Bank on Sunday purchased $171 million from commercial banks through a dollar auction—its first such move—aiming to arrest the recent slide of the US dollar against the local currency.
The central bank’s decision comes amid a sustained decline in the dollar’s exchange rate, triggered by a surge in remittance inflows and export earnings. At the same time, subdued import demand and ongoing trade negotiations with the United States have contributed to weakening demand for the greenback, according to market insiders.
Over the past week, the US dollar depreciated by nearly Tk 3.0 against the Bangladeshi taka (BDT), falling from above Tk 123 to around Tk 120 in most banks on Sunday.
To counter this, Bangladesh Bank fixed a single exchange rate of Tk 121.50 per dollar during the auction, aligning with the real effective exchange rate and factoring in inflationary pressures, officials said, though they did not disclose the exact calculation method.
“We’ve intervened in the market by purchasing US dollars from commercial banks through an auction, aiming to stabilize the exchange rate of the BDT against the greenback,” a senior central bank official told The Financial Express. He also noted that the central bank stands ready to sell dollars via auction if the exchange rate swings in the opposite direction.
The move signals a more active exchange rate management policy from the central bank, which may intervene as needed to prevent excessive volatility, the official added.
A senior treasury executive at a leading private commercial bank expects the exchange rate to rebound to Tk 121.50 per dollar on Monday, up from Tk 120 a day earlier.
