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Exchange Rates Stabilize Under New Crawling Peg System

Economic Tag: Forex

Under the newly introduced crawling peg system in Bangladesh, exchange rates have remained almost stable, according to the central bank and top bankers. This system, implemented as part of a reform initiative, aims to mitigate forex volatility. The weighted average exchange rate has shown minimal fluctuation since the introduction of the crawling peg system. On May 9, the first day of its operation, the rate was Tk 117.49, and by May 14, it stood at Tk 117.45, indicating stability, as per a senior central banker.

While official exchange rates have remained steady, the kerb market, or informal market, has shown some volatility, with reports suggesting dollar prices ranging from Tk 120 to Tk 125. Despite this, there is optimism for increased stability in the coming weeks. Importantly, the new system allows for more active interbank transactions, influencing letter of credit (LC) opening rates, which are now based on market rates.

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