Bangladesh's transition to a market-based exchange rate marks a pivotal step in its economic reform agenda, aligning with key International Monetary Fund (IMF) requirements for loan disbursement.
Implemented officially on Thursday, the change is expected to bring long-term structural benefits to the country's foreign exchange market, even though its immediate impact appears to be relatively mild.
Contrary to widespread speculation of a sharp dollar surge, the first day of the policy shift saw only marginal changes. Banks continued trading at previously set rates, selling dollars at around Tk 123, while open market rates hovered slightly higher, around Tk 125.
The absence of significant fluctuation suggests a level of preparedness and calm among financial institutions and consumers alike. It also indicates that the central bank's pre-emptive measures-like instructing banks to avoid inflated exchange rates from certain foreign exchange houses-are proving effective results.
The policy shift is being introduced at a time when dollar demand is typically high, especially in the lead-up to Eid. Yet, the market remained composed, with sufficient dollar liquidity in banks and limited pressure in the open market. Customers were reportedly able to obtain dollars from banks without difficulty, diminishing the need to seek alternative or unauthorized sources. This is an encouraging sign that the new system is already fostering transparency and trust.
Moreover, commercial banks are currently holding a reserve of USD 50 million, allowing them to meet demand directly. This buffer has helped prevent the panic buying and hoarding behaviors that often accompany sudden monetary changes.
While some traders have attempted to stockpile dollars in anticipation of future hikes, demand has remained manageable, further indicating that the market is not succumbing to irrational pressures.
The open market also reflected a cooling of speculative behavior. Traders saw less foot traffic than anticipated, largely because banks were adequately meeting public demand. This trend supports the idea that improved institutional access to foreign currency can neutralize the shadow economy that thrives on uncertainty.
Nevertheless, while the early signs are stable, the path ahead must be treaded carefully. The central bank has reiterated its commitment to intervene if syndicates or external influences attempt to manipulate the market. Ensuring that the exchange rate truly reflects domestic supply and demand-rather than being swayed by offshore trading hubs-will be crucial in preserving national economic sovereignty.
Looking forward, increased remittance inflows and a growing supply of physical dollars are expected to reinforce market stability. As the new system matures, a more dynamic and transparent currency valuation process should emerge-benefiting businesses, expatriates, and the broader economy. The transition that began on a steady note; sustained vigilance and responsible oversight will be key to its long-term success.
