Washington DC September 16 2022: Bangladesh’s pivot to a more market-driven exchange rate will help the nation fight external shocks, the International Monetary Fund said.
“Greater flexibility will help buffer external shocks, manage domestic liquidity conditions, and strengthen monetary transmission,” Rahul Anand, IMF mission chief for Bangladesh, said in an emailed response to questions Friday. The move is in line with IMF policy advice, he said.
Bangladesh loosened its control on its currency this week and allowed the taka to weaken, with Finance Minister AHM Mustafa Kamal saying the nation will gradually go for a floating exchange rate. The government is seeking a loan from the IMF and a more market-driven exchange rate is typically one of the conditions set by the Washington-based lender.
Bangladesh Bank has injected $10.4 billion into the currency market since July 2021 to support the taka
The taka traded as low as 106.9 per dollar on Wednesday, losing 11% of its value this week, according to data from the central bank.
Bangladesh Bank has injected $10.4 billion into the currency market since July 2021 to support the taka, according to BRAC EPL Stock Brokerage Ltd.
The South Asian nation is seeking loans from multilateral lenders, including the World Bank, as costlier oil eats into the nation’s foreign-exchange stockpiles that declined to $38.9 billion as of Sept. 7 from $48.1 billion a year earlier, enough to cover roughly four months of imports.
