"The IMF welcomes the move by Bangladesh Bank to set exchange rates for its transactions with authorised dealers no longer in reference to a pre-announced bands as of May 31," the IMF said in a press release yesterday.

Domestic economic conditions are very favourable for this move and Bangladesh Bank has made careful technical preparations, added the press release signed by IMF Resident Representative Marijn Verhoeven.

It said, "the move to a more flexible exchange rate regime will protect competitiveness and enhance resilience to shocks."

The introduction of floating exchange rate also brings Bangladesh in line with currency arrangements already adopted by the other major countries in the region, such as India, Pakistan and Sri Lanka, the IMF said.

It assured that future support under the World Bank's Development Support Credit and the IMF's Poverty Reduction and Growth Facilities would add considerable financial safeguards and bolster confidence in the exchange system.