Bangladesh Bank has verbally instructed commercial banks to further reduce the rate at which they purchase US dollars, as part of its ongoing efforts to stabilise the foreign exchange market, according to official sources.
Under the latest directive, banks have been told to cap the buying rate for remittances from money exchange houses at a maximum of Tk122.85 per US dollar. A senior official of Bangladesh Bank confirmed the instruction to The Business Standard.
This represents a marginal reduction from the previous ceiling of Tk122.90 per dollar set on 13 April, indicating a continuation of the central bank’s gradual tightening approach to managing exchange rate movements in the domestic market.
Policy context and official stance
Central bank officials maintain that exchange rate stability is necessary to contain import-driven inflation. They argue that higher fuel and import costs could exert additional pressure on prices, making a controlled dollar rate important for macroeconomic stability. According to a senior official, keeping the dollar price lower helps importers manage costs, which may ultimately benefit both businesses and consumers.
At the same time, Bangladesh Bank has already introduced a reference exchange rate framework, though it continues to use direct instructions in certain cases to influence market behaviour.
Market reactions and criticism
Bankers and economists have raised concerns over the frequency and nature of such interventions, noting that repeated verbal directives are not considered standard market practice. Critics argue that exchange rate management should rely more on market-based mechanisms, such as dollar auctions, rather than administrative instructions.
Former World Bank Dhaka office lead economist World Bank Dr Zahid Hussain said discussions are ongoing in the context of International Monetary Fund (International Monetary Fund) loan conditions, which include moving towards a more flexible exchange rate regime. He noted concerns that current management practices may not fully align with expected reforms.
Key market indicators
| Indicator | Figure / Rate | Period / Note |
|---|---|---|
| New capped buying rate | Tk122.85 per USD | Latest instruction |
| Previous capped rate | Tk122.90 per USD | Set on 13 April |
| Remittance inflow | $28.92 billion | Up to 26 April (current FY) |
| Dollar index change | +0.68% | 28 Feb – 27 Apr |
| Domestic exchange rate rise | +0.37% | Same period |
| Private bank buying rate | Tk122.85 – Tk122.95 | Recent trading |
Remittance and liquidity conditions
According to central bank data, remittance inflows remain strong, totalling $28.92 billion up to 26 April in the current fiscal year. Officials also noted that foreign exchange supply has been relatively stable, supported by remittance earnings, while import letters of credit declined in March.
However, market volatility was observed in recent weeks. Some private commercial banks reportedly purchased dollars at around Tk123, influenced in part by upcoming payment obligations from the Bangladesh Petroleum Corporation and Petrobangla. Rates later eased slightly, with banks reporting a range of Tk122.85 to Tk122.95 per dollar.
Central bank officials also indicated that increased forward booking activity from mid-March contributed to higher demand for dollars. In response, Bangladesh Bank directed banks in early April to halt forward booking operations to contain pressure on the foreign exchange market.
Despite policy debates, officials acknowledge that repeated verbal interventions may attract scrutiny from international partners, including the IMF, particularly in relation to exchange rate liberalisation commitments.