Kamal rules out major exchange rate fluctuation

The US dollar will not fluctuate much in Bangladesh despite worries expressed by market operators as the rate is set under a floating exchange rate regime, not by the government, said Finance Minister AHM Mustafa Kamal yesterday.

"Moreover, the country's monetary and fiscal policies are very much aligned, and it is expected that the rates of US dollars will not fluctuate too much," he told reporters after a meeting of the cabinet committee on economic affairs in Dhaka yesterday.

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The comments came days after the interbank exchange rate hit Tk 86 per dollar for the first time. This was a major depreciation of the local currency in recent years.

The central bank usually depreciates the taka between Tk 0.05 and Tk 0.10 per dollar for a particular working day.

Sunday's move was aimed at tackling pressure stemming from an increase in import payments and giving encouragement to remitters.

"The BB is considering a gradual appreciation of the dollar against the taka to give a boost to both exporters and remitters," Md Habibur Rahman, acting chief economist of the central bank, told The Daily Star on Monday.

Independent economists welcomed the BB move and went on to urge the central bank to depreciate the local currency to at least Tk 88 per dollar.

The local currency is trading at more than Tk 90 per USD in the kerb market.