Central bank introduces dollar at Tk117 with new exchange rate system

Bangladesh Bank (BB) unveiled the crawling peg exchange rate system today, allowing banks to freely trade US dollars at around Tk 117.

"It has been decided to introduce a crawling peg exchange rate system for spot purchases and sales of US dollars," the BB stated in a notice.

Effective immediately, a Crawling Peg Mid Rate (CPMR) has been established at Tk 117 per US dollar under this new system.

According to BB, "Scheduled banks may purchase and sell US dollars freely around the CPMR with their customers and in interbank deals."

The crawling peg system, positioned between fixed and floating exchange rates, permits limited fluctuations within a predefined range. Unlike a fixed exchange rate, which offers little flexibility, the crawling peg system allows for controlled adjustments.

Since mid-2022, the taka has been on a downward trend against the dollar. This depreciation is primarily attributed to a balance of payments deficit, leading to a notable reduction in reserves. Consequently, the weakening taka has spurred domestic inflation, driven by increased import costs.