Bangladesh Bank (BB) is set to introduce a single exchange rate for the US dollar, aiming to enhance transparency in dollar trading across banks.

Throughout 2024, the central bank has been actively engaged in foreign exchange management, providing dollars to facilitate import payments as the local currency depreciated multiple times.

Businesses have faced significant challenges due to the dollar crisis, particularly in opening letters of credit (LCs). Commercial banks often struggled to provide US dollars at the central bank's fixed rate, forcing importers to pay higher prices for dollars to meet their liabilities.

Despite these higher dollar rates, the prices of essential goods in the domestic market did not ease in 2024.

To address this issue, the central bank plans to finalise a single exchange rate for the dollar, following the implementation of a crawling peg system seven months ago.

Bangladesh Bank steps in to stabilise exchange rates

Under this system, the central will introduce a reference rate, allowing banks to trade dollars with a maximum Tk1.0 difference between buying and selling rates.

A circular formalising this decision will be issued soon, aimed at stabilising the dollar market. "Banks that violate these instructions will face fines of a minimum Tk10 lakh or 5 percent of the LC transaction value," said a managing director of a private bank who attended a meeting with the governor yesterday.

Bangladesh Bank Governor Dr Ahsan H Mansur shared the directives during a meeting with managing directors and treasury heads of around 40 banks held at the central bank headquarters.

The governor emphasised that banks must publish their exchange rates and ensure transactions adhere to these rates.

Besides, all transaction information will need to be submitted to BB. For transparency, the central bank will publish the overall market rate twice daily.

To enforce compliance, the central bank will establish a complaints cell headed by high-ranking officials. This cell will investigate complaints from the banking sector or aggrieved customers.