BB unwilling to follow IMF advice on dollar rate

Zarif Mahmud : The International Monetary Fund (IMF) has continued to press for the dollar to be market-based. Remittances will increase if rates are quickly market-based. Export income will also return quickly. However, Bangladesh Bank has informed them that there is currently no environment to base the rates on the market.
Several meetings were held online yesterday between the IMF technical committee and Bangladesh Bank’s special committee. Officials of the central bank said that there will be a 15-day continuous session from March 27 with the technical committee of the IMF for detailed discussions.
The IMF believes that central bank-mediated rate setting should be left to the market. Doing so will further reduce the existing pressure on foreign exchange.
However, the central bank is not moving away from the conservative position even if the IMF continues to pressure. Bangladesh Bank told the IMF that there is no environment to base the dollar rate on the market. For this, the Central Bank has given an opinion that the rate will be fixed in a controlled manner in the corridor system.
The IMF delegation discussed the country’s interest rate regime, liquidity management and non-performing loans, in addition to the dollar and foreign exchange reserves. A delegation of the organization is holding a series of meetings with various parties to verify the compliance of various conditions for the $4.7 billion loan from the IMF.
The IMF reportedly wants more details on the central bank’s handling of dollar sales despite the decline in foreign exchange reserves. In response, Bangladesh Bank said that even though the reserves are reduced, dollars are being sold for the import of electricity and fuel sector.
The central bank also said that they will bring more reforms in foreign exchange market management. Dollars will be traded through crawling pegs ahead.
According to sources, apart from dollar, interest rate, IMF wanted to know about defaulted loans and liquidity situation. They are informed about reducing liquidity in the market by raising interest rates to control inflation.
In this regard, the spokesperson and executive director of Bangladesh Bank Majbaul Haque said that almost all conditions of the IMF have been implemented. The donor agency has given time to make the dollar market-based. For this reason, it is recommended to introduce a crawling peg in its throat. It is market based but regulated. After considering the situation, the dollar rate will be left to the market.