The foreign exchange market remained largely stable on Thursday following the Bangladesh Bank鈥檚 announcement to adopt a market-based exchange rate system in line with the International Monetary Fund鈥檚 conditions.
Banks continued buying remittances and selling dollars at the previous rate, at about Tk 123, without any noticeable market reaction, bankers said.
Reference rate of dollar transaction by banks published by the Bangladesh Bank on Thursday was Tk 121.94 each at 11:00am and Tk 121.99 each at 5:00pm. The same was Tk 121.99 each at 11:00am and Tk 121.92 each at 5:00pm on Wednesday.
Bangladesh foreign exchange market spot reference exchange rate (RR) is a transaction-based weighted average rate that comprises FX spot transactions (interbank and client level) of $1,00,000 or above on the country鈥檚 forex market.
On the informal market, however, rates edged up slightly, with traders trading dollars at about Tk 125 each.
On Wednesday, all banks were instructed to trade dollars at market-based rates.
On Wednesday, BB governor Ahsan H Mansur at a press briefing said that the exchange rate of the US dollar was now to be determined by market forces with the central bank ensuring strong oversight.
Speaking virtually from Dubai at a press conference on the day, Mansur said that the rate was expected to remain close to its current level and would not rise significantly after the shift, given the prevailing macroeconomic indicators.
To prevent abrupt fluctuations, Mansur said that the shift did not mean banks could trade dollars at any rates. 鈥榃e expect that the rate would hover around the current level,鈥� he said.
The Bangladesh Bank on the same day issued a circular repealing its January 2 directive on trading spread limits, while keeping in place the December 31 circular on transaction reporting.
Under the system, banks must report all foreign exchange transactions exceeding $1,00,000 twice a day.
As part of its transparency efforts, the central bank has also been publishing a daily benchmark rate since January 12, calculated as a weighted average of market-based transactions.
Foreign exchange houses did not offer higher rates. The Bangladesh Bank instructed banks to avoid buying from houses demanding excessive rates, which officials say helped contain potential price hikes.
With Eid-ul-Azha approaching, remittance inflows and cash dollar inflows are rising, reducing any immediate risk of market volatility, according to central bank officials.
