Bangladesh Bank has verbally cautioned several commercial banks against purchasing United States dollars at inflated exchange rates, in a bid to stabilise the country’s foreign exchange market and prevent unnecessary volatility.
The issue was discussed on 9 April at a meeting in Dhaka between the central bank Governor Md Mostaqur Rahman and senior representatives of the Association of Bankers Bangladesh. Officials familiar with the discussions said the regulator had observed a pattern of some banks aggressively bidding up dollar prices, particularly in remittance and interbank transactions, which risked distorting market fundamentals.
A senior central bank official said banks were clearly instructed to refrain from both buying and selling dollars at artificially elevated rates. He stressed that exchange rates should reflect genuine supply and demand conditions rather than competitive pricing behaviour among banks seeking to secure foreign currency.
According to the official, foreign exchange liquidity remains broadly adequate, and banks are currently maintaining a stable net open position. In such circumstances, higher-than-necessary purchasing rates were deemed unwarranted and potentially destabilising for the market.
The central bank has reportedly advised commercial banks to cap purchases of remittance-linked US dollars from exchange houses at Tk123.10, while interbank transactions should not exceed Tk122.75. Despite this guidance, several bankers acknowledged that transactions have still been occurring around Tk123, indicating partial non-compliance in the market.
Market participants noted that interbank dollar trading volumes have fallen in recent days following the introduction of the cap. Many banks that acquired dollars at relatively higher rates from exchange houses have become hesitant to sell at the lower interbank ceiling, resulting in reduced liquidity and slower market activity.
Foreign exchange guidance overview
| Area | Central bank instruction | Market impact |
|---|---|---|
| Dollar purchases | Avoid inflated buying rates | Aim to stabilise pricing |
| Remittance dollars | Maximum Tk123.10 from exchange houses | Partial adherence reported |
| Interbank rate | Ceiling of Tk122.75 | Trading activity reduced |
| Market mechanism | Rates to follow supply-demand balance | Intended to ensure discipline |
During the same meeting, the Association of Bankers Bangladesh also raised a series of policy proposals aimed at easing operational constraints in the banking sector.
One key request involved revising a December 2025 directive that bars banks with capital or provisioning shortfalls from paying incentive bonuses to employees. Bankers argued that such restrictions could weaken staff motivation, particularly in challenging financial conditions. A senior official indicated that the governor signalled willingness to consider a revised framework that could allow bonuses for banks meeting minimum provisioning requirements, even if capital positions remain under strain.
The ABB also proposed lifting the existing Tk15 lakh annual cap on bonuses for managing directors, arguing that the limit constrains compensation flexibility and may affect leadership retention. In addition, the association called for an increase in the personal loan ceiling for banking clients from Tk20 lakh to Tk40 lakh.
Furthermore, bankers suggested allowing up to 90 per cent financing for the purchase of hybrid vehicles, framing the proposal as part of broader efforts to encourage environmentally friendly investment and modernise lending practices within the sector.