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number of measures were adopted since 1990s. Bangladeshi currency, the taka, was
declared convertible on current account transactions (as on 24 March 1994), in terms of
Article VIII of IMF Article of Agreement (1994). As Taka is not convertible in capital
account, resident owned capital is not freely transferable abroad. Repatriation of profits
or disinvestment proceeds on non-resident FDI and portfolio investment inflows are
permitted freely. Direct investments of non-residents in the industrial sector and portfolio
investments of non-residents through stock exchanges are repatriable abroad, as also are
capital gains and profits/dividends thereon. Investment abroad of resident-owned capital
is subject to prior Bangladesh Bank approval, which is allowed only sparingly.
Bangladesh adopted Floating Exchange Rate regime since 31 May 2003. Under the
regime, BB does not interfere in the determination of exchange rate, but operates the
monetary policy prudently for minimizing extreme swings in exchange rate to avoid
adverse repercussion on the domestic economy. The exchange rate is being determined in
the market on the basis of market demand and supply forces of the respective currencies.
In the forex market banks are free to buy and sale foreign currency in the spot and also in
the forward markets. However, to avoid any unusual volatility in the exchange rate,
Bangladesh Bank, the regulator of foreign exchange market remains vigilant over the
developments in the foreign exchange market and intervenes by buying and selling