Taka sees major devaluation, dollar price hiked by Tk 7 in a day

The Bangladesh Bank (BB) has raised the dollar price to Tk 117 from the existing Tk 110 by introducing the Crawling Peg Exchange Rate (CPER) system.

The central bank took the decision during a meeting of the monetary policy committee held at its head office at Motijheel in Dhaka on Wednesday.
Under the system, a Crawling Peg Mid Rate (CPMR) has been set at Tk 117 per US dollar with immediate effect.

The scheduled banks may purchase and sell US dollars freely under the CPMR system with their customers and in interbank deals, said a circular of the Bangladesh Bank.

A crawling peg is a system of exchange rate adjustments in which a currency with a fixed exchange rate is allowed to fluctuate within a band of rates.

The par value of the stated currency and the band of rates may also be adjusted frequently, particularly in times of high exchange rate volatility.

Sources at the Bangladesh Bank told the Daily Observer Online on Wednesday that much of the existing dollar crisis would get resolve owing to the introduction of 'crawling peg' system.

In consultation with the central bank, the Bangladesh Foreign Exchange Dealers Association (BAFEDA) and Association of Bankers Bangladesh (ABB) have so far fixed the dollar selling and buying rates to and from the customers. Neither the BAFEDA, nor the ABB will have no role to fix the rates of dollar from now on, sources said.

On January 22 last, Bangladesh Bank said about the introduction of 'crawling peg' system. Then the central bank discussed with the International Monetary Fund (IMF) on how to introduce the system. Though the 'crawling peg' system was scheduled to be introduced within March this year, the central bank subsequently announced the introduction of it in the second week of May.

It may be mentioned that an IMF team is now visiting Bangladesh.