BB cuts remittance dollar cap to Tk122.85
Bangladesh Bank (BB) has informally advised commercial banks to reduce their US dollar buying rates, setting a ceiling of Tk122.85 for remittance purchases, in a move aimed at stabilising the foreign exchange market, officials have said.
The latest guidance represents a slight reduction from the
Tk122.90 cap introduced on 13 April, signalling the central bank’s ongoing effort to gradually ease dollar rates in the domestic market.
However, the step has attracted criticism from bankers and economists, who argue that such frequent and informal interventions deviate from standard market practices.
Although BB has introduced a reference exchange rate framework, critics contend that verbal instructions to influence rates extend beyond conventional policy tools.
Central bank officials defended the measure, citing concerns over rising fuel prices and inflationary pressures.
They said that maintaining a lower dollar rate would help contain import costs and mitigate price increases.
“If the dollar strengthens, import expenses rise, which fuels inflation. That’s why maintaining stability is important,” a senior official said.
Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office, cautioned that such actions could raise concerns in ongoing discussions with the International Monetary Fund (IMF), which has been encouraging Bangladesh to move towards a more market-driven exchange rate system.
“The IMF does not support this kind of indirect control,” he noted, adding that while intervention is not unusual, it should be conducted through market-based mechanisms such as dollar auctions.
He also questioned the rationale behind the directive, pointing out that exchange rate movements are typically driven by supply and demand dynamics.
Data indicates relative stability, with the global dollar index rising by 0.68 per cent between late February and April, compared with a 0.37 per cent increase in Bangladesh’s exchange rate over the same period.
Officials, meanwhile, maintain that a lower dollar rate benefits importers and consumers by reducing the cost of goods.
Nonetheless, some within the central bank acknowledged that repeated verbal interventions could be viewed unfavourably by the IMF.
Business groups have also been advocating for a stronger taka to ease import costs.
Despite the policy debate, remittance inflows remain robust, reaching $28.92 billion in the current fiscal year up to 26 April, according to BB data.
Recent market movements saw some private banks purchasing dollars at around Tk123 last week, driven by substantial payment requirements from state-owned entities such as Bangladesh Petroleum Corporation and Petrobangla.
Rates have since moderated slightly, with banks buying remittances between Tk122.85 and Tk122.95.
Officials said that although overall dollar supply remains adequate, some banks had been offering higher rates, pushing up market prices.
Demand also increased following a rise in forward bookings from mid-March, prompting the central bank to instruct banks earlier this month to suspend such bookings.
