Bangladesh’s central bank increased its key interest rate to 8.0% and introduced a crawling peg system for the local currency to address inflation and preserve FX reserves. The transition to a crawling peg system is a preliminary step towards a freely floating exchange rate, which Bangladesh pledged in June 2023 under an IMF loan program. The local currency has depreciated by 6% against the USD since end-2022, mainly due to weak external finances and a declining FX stockpile.