Bangladesh Bank, IMF ‘mull over dollar exchange rate reform’

The International Monetary Fund (IMF) and Bangladesh Bank are looking for a more dynamic approach to managing the dollar exchange rate during the ongoing midterm review meeting in Dhaka.

Bangladesh Bank spokesperson and executive director Hosne Ara Shikha said that their Tuesday’s discussions aimed to tackle the stagnation observed in recent months.

Despite relative stability in the exchange rate, conversions have slowed, with many holding on to their dollars in anticipation of market shifts, she said.

To address this, policymakers are examining strategies to create controlled fluctuations in the exchange rate to ensure a more responsive and adaptive foreign exchange market, according to Shikha.

Among the proposals being discussed is the introduction of a crawling peg system, which allows for gradual and pre-announced adjustments in currency value.

“We are exploring mechanisms to balance stability and flexibility in the market. While a crawling peg is under consideration, no final decision has been made. A clearer picture will emerge once the discussions conclude,” said Shikha.

Experts view these deliberations as critical for bolstering Bangladesh’s foreign exchange reserves and maintaining economic resilience amid global currency volatility.

The midterm review, part of ongoing collaboration between the IMF and Bangladesh, also evaluates progress under the current financial support programme.

Further updates are expected following the conclusion of the meeting.