In a major policy shift prompted by the exigency of stabilising Bangladesh's foreign-exchange market, the central bank skips dollar buy from commercial banks.
Officials and bankers say such change in the forex-management strategy was observed following recent trade in the American greenback by the country's central bank.
Since September last, the Bangladesh Bank (BB) had intensified its focus on buying more dollars from the market to prop up the country's fast-depleting foreign-exchange reserves as the push reportedly came from the urgency of hitting the NIR (net international reserve) target set by the International Monetary Fund (IMF) in its $4.70-billion lending package to stabilise the country's macroeconomic condition.
As the forex market became extremely volatile with the exchange rate overshooting Tk 127 in mid-December after a sudden demand surge for the dollar, the banking regulator backtracked on its dollar-buy plan by effectively meeting the NIR ceiling. As such, it ceased purchasing the US currency from the market, according to them.
According to BB data, the central bank purchased $10 million in August last followed by $88.50 million, $47 million and $47.5 million in September, October and November respectively.
Until December 19, 2024, the regulator had bought 59 million from the commercial banks. Since then up to January 13, 2025, the central bank did not buy a single penny from the market.
Seeking anonymity, a BB official said they decided not to buy any dollar from the market considering current state of the forex market.
"If we continue buying dollars from the banks, it might put more pressure on the market that we don't want," says the official, in an experience-driven change of mind.
Hailing the decision, the central banker says it is also helping to cool the overheated forex market alongside growing inflow of US dollars in the form of remittance and export receipts.
Managing Director and Chief Executive Officer of Mutual Trust Bank (MTB) Syed Mahbubur Rahman says the pressure of forex demand in banks had gone up significantly last month, creating some sort of volatility in the exchange rate.
"Considering the market scenario," he says, "the central bank might make such temporary policy shift probably to lessen the burden on the banks."
Dr M Masrur Reaz, an economist and chairman of Policy Exchange of Bangladesh, also sees it as a positive change in the BB strategy to maintain price stability on the forex market following an abrupt demand surge within a short period of time last month.
"The central bank needs to create a forex-intervention fund through which it can stabilise the market either buying or selling considering the market demand," he suggests.
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