Bangladesh Bank Governor Ahsan H Mansur has reaffirmed that the country’s foreign exchange market is operating under a fully free-floating regime, addressing concerns raised by a visiting International Monetary Fund (IMF) delegation.
The clarification came during a meeting held at the central bank headquarters on 2 November around 5pm, attended by several deputy governors and executive directors.
According to an executive director present at the meeting, the IMF team questioned whether Bangladesh’s exchange rate system could truly be described as free-floating, noting that market interventions still appear to occur.
In response, Governor Mansur stated, “We are in a completely free-floating position. There is no intervention in the market.”
When IMF representatives asked why the central bank continues to purchase US dollars if the market is entirely free-floating, Mansur explained that such operations are normal for export- and remittance-driven economies.
“Countries like Japan also buy dollars from the market,” the governor noted, adding that the purchases are not meant to influence exchange rates but rather to absorb excess liquidity.
He further clarified that banks currently hold ample dollar reserves, while import demand remains subdued, leading to a temporary surplus of foreign currency. The central bank, he said, is buying dollars merely to stabilise market conditions and ensure smooth liquidity management.
The IMF’s observation forms part of a broader dialogue with Bangladesh Bank regarding monetary policy transparency and the ongoing transition to a market-based exchange rate.
The clarification came during a meeting at the central bank headquarters on 2 November, attended by deputy governors and executive directors. The IMF team had questioned whether the exchange rate system could truly be considered free-floating, noting apparent market interventions.
In response, Governor Mansur stated, “We are in a completely free-floating position. There is no intervention in the market.” When asked why the central bank continues to purchase US dollars, he explained that such operations are normal for export- and remittance-driven economies and are intended to absorb excess liquidity, not to influence exchange rates.
He added that banks currently hold ample dollar reserves, while subdued import demand has created a temporary foreign currency surplus. The IMF’s observation forms part of an ongoing dialogue on monetary policy transparency and the transition to a market-based exchange rate system.