The central bank has raised the dollar by 7 rupees due to less supply than demand in the market and International Monetary Fund (IMF) loan conditions.

The official rate of the dollar, which has been at 110 taka for a long time, has been raised to 117 taka in a day. This resulted in a major devaluation of the rupee along with the dollar.

Bangladesh Bank has issued a circular in this regard on Wednesday (May 8). It is said that the new method of determining the rate of dollar ‘crawling peg’ has been introduced.
From now on dollar will be bought and sold in a new method called ‘crawling peg’. In this method, the ‘Crawling Peg Mid-Rate’ (CPMR) has been fixed at Tk 117. Banks can add or subtract 1 taka from this. This means the highest rate of dollar will be 118 rupees.

According to central bank officials, dollars will be bought and sold within a certain limit in the crawling peg system. In the new system, the value of the dollar will increase or decrease within a range, taking into account various aspects of the economy. In this way, the price of the dollar cannot increase or decrease too much at once. Bangladesh Bank has fixed the intermediate limit without fixing the upper limit and lower limit. Banks have been asked to stay around this rate for dollar transactions.

So far Bangladesh Foreign Exchange Dealers Association (BAFEDA) and Association of Bankers Bangladesh (ABB) used to decide the rate at which dollar will be bought and sold to the general customer starting from import and export in consultation with the central bank. From now on, Buffeta or ABB will have virtually no role in determining the price of the dollar.

On January 22 this year, Bangladesh Bank announced the introduction of the crawling peg system. Bangladesh Bank approached the IMF about how to start this system. Although it was said to introduce this system by last March, the central bank announced this in the second week of May. An IMF team is now visiting Bangladesh.

Meanwhile, the price of the dollar was 110 rupees from September last year till today. As the central bank fixed the dollar price, one dollar was sold in the open market i.e. curb market from 118 taka to 118 taka 50 paisa. Due to the new system, the price of the dollar will rise from 124 to 125 taka in one jump – say the sector concerned.

On January 30, 2023, the IMF approved a USD 4.7 billion loan program for Bangladesh. During this time several conditions were given including some policy reforms. After the start of the loan program, Bangladesh received more than 1 billion dollars in two installments. The third tranche is expected to receive $700 million next month. Before that, a 10-member IMF delegation that came to Dhaka to hold a review meeting held a meeting with Bangladesh Bank and Finance Department NBR.