Bangladesh Bank will establish a $500 million fund to stabilise the foreign exchange market following its decision to shift to a market-based exchange rate regime, the central bank announced on Tuesday.

“If the market becomes unstable due to the market-based exchange rate, we will intervene,” said Bangladesh Bank Governor Ahsan H Mansur.

The move comes as part of broader reforms aligned with the International Monetary Fund’s loan conditions, under which the country agreed to liberalise the exchange rate system.

The fund is expected to act as a buffer to curb volatility and ensure orderly market operations during the transition.