—Mostofa Kamal—

Was there ever a demand to control the price of the dollar through the police? Did anyone even suggest that? Even if no such questions were raised, Governor Dr Ahsan H Mansur made it clear – he won’t be using the police to regulate the exchange rate of the dollar. So then, how exactly does he plan to do it? With a pat on the back? A wink and a whistle? Apparently not.

The decision, it seems, is to let market demand and supp

ly determine the rate. In other words, the value of the dollar will now be set by banks and their customers – what economists call a market-based system. The role of the Bangladesh Bank? Just to collect rate updates from banks every morning and evening.

Behind this shift lies, unsurprisingly, the International Monetary Fund (IMF). In line with its loan conditions, the IMF has nudged Bangladesh Bank to adopt a more flexible approach. Deputy Governor Md Habibur Rahman explained this was also meant to signal to the international community that Bangladesh is serious about reform. The Governor, Dr Mansur, has been even more vocal on the matter.

Money changers are, understandably, treading carefully. They deal in cash dollars and can read the signs. From experience, they know a small price rise is fine – no drama. But if it goes up too much? That’s when the government tends to step in. Until then? Well, that bit’s left unsaid.

Unfortunately, the whole financial sector ends up bearing the brunt of casual, offhand comments on sensitive matters. We’ve seen the damage that such remarks can do. Remember the time a former finance minister cheerfully said bribes should be thought of as speed money?

Or when another suggested public servants should just keep it to a “tolerable level”? They talked a lot, but  never set a “bribe rate card”, did they?

Let’s not forget the one who claimed, “I don’t understand the stock market – it’s all a gamble.” These aren’t remarks befitting someone in high office. And yet, they’ve left a long-lasting impact – damage we’re still trying to recover from.

So why, during these difficult times, are we hearing this kind of lighthearted commentary again? One recent remark about ten banks teetering on bankruptcy triggered panic withdrawals. Customers, in fear, rushed to pull out their savings – deepening the crisis further. Several struggling banks are still limping along, and more are bending under pressure, rather than standing tall. Now, we hear similar flippant remarks about the dollar.

Let’s be honest – Dr Ahsan H Mansur’s background with the IMF means he naturally views things through their lens. That’s understandable. But does that mean he has to mirror their every tone and phrase? This government has shown a particular zeal in complying with IMF demands.

Although Dr Salehuddin Ahmed, an economic advisor, proudly stated that the IMF hasn’t forced any conditions on Bangladesh, his very next breath hinted otherwise – acknowledging that some pressures were indeed felt, especially regarding the dollar. No, the IMF doesn’t send in troops or police. But they do tighten the collar and ensure terms are enforced. In the name of compliance, Bangladesh has gone through so many experiments with the dollar that it feels like a lab rat. The result? A currency market in constant flux.

Still, the IMF seems pleased. They’re patting us on the back, saying these reforms will lead to sustainable growth. One key condition: reduce government spending. Translation? Less funding for social safety nets. They’ve also asked to cut costs in the power sector, which inevitably means higher electricity bills. That leads to increased prices across all sectors – and inflation, as sure as day follows night.

Meanwhile, the private sector continues to bleed from past import restrictions. Investment is frozen. Job creation is stalled. Factory after factory has shuttered, leaving tens of thousands unemployed. While all this unfolds, Bangladesh Bank has been selling off dollars from its reserves to manage the market amidst these policy trials. But how much more suffering must we endure to keep the IMF happy with our “market-based” reforms?

Ironically, if the market were truly free, this chaos wouldn’t be necessary. Yet, Bangladesh Bank continues to buy and sell dollars as needed – despite claiming they won’t use force. The situation is such that they don’t need to grab the collar, they’ve got the market by the ears instead. Meanwhile, banks are being made to assure the public that everything’s fine, that there’s no shortage of dollars, that all major payments will go through smoothly.

Sounds lovely, doesn’t it? Just like a gentle baton charge from the police – painful, but politely done.

Right now, dollar demand is low, hence the calm. But what happens when it picks up again? Will incoming foreign loans fix everything overnight? Sellers are already demanding higher prices based on expected demand, and they know exactly what could happen if reserves don’t rise or if imports surge again. But Governor Mansur remains optimistic.

He’s said an interim government can’t fully revive the economy, but he hopes to hand over a partially-recovered system to the next elected one – fueled by remittances, exports, and foreign aid. Reserves are now around $27 billion and expected to reach $30 billion soon. If that happens, there is no need for police or even the Ansar to control the dollar rate, apparently. Still, there’s concern over a proposed 5% tax on remittances by former US President Donald Trump. If that goes into effect, remittances could drop, and the hundi (informal) system might make a comeback. That would surely push dollar prices up again.

Sadly, the government seems more focused on beefing up reserves than fixing investment, exports, or employment. And for that, they’re pinning hopes on the diaspora. Eid-ul-Azha is coming up, so naturally, remittance inflows will spike and help fatten the reserve figures. In Qatar, a large new gas field has been discovered. If supply increases, gas prices may drop, reducing the demand for dollars used in fuel imports. Plus, there’s funding coming from the IMF, ADB, and the World Bank. But how all this plays out in reality is anyone’s guess.

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The writer is a journalist and columnist, presently working as Deputy Head of News at Banglavision