DHAKA, May 31: The Bangladesh taka began trading freely for the first time on Saturday and was steady at 58.65 to the dollar early in the session on slack dollar demand as most major international trading centres were closed, dealers said.

There may only be a few deals in a quiet market on the first day of flotation and the exchange rates are likely to remain steady, one dealer said.

On Thursday, the taka was traded at 58.4950/58.7000 to the dollar. Friday is a market holiday in Bangladesh.

Some economists and bankers had said the flotation could trigger market volatility and possibly a depreciation of the currency of up to 20 per cent.

Bangladesh’s foreign aid donors have been asking Dhaka to float the currency as part of financial reforms, officials have said.

Dealers at Standard Chartered bank said on Saturday they had sold $0.5 million to a Bangladeshi private bank at 58.65 taka per dollar. The bank had offered two-way quotation at 58.60/58.65 taka per dollar.

Economists said the decision to float the taka was timely and necessary to keep pace with neighbouring countries but it needed efficient handling by the central bank.

Previously, the Bangladesh Bank had undertaken spot purchase or sale of US dollars with authorised dealers at rates decided separately in each case with a pre-announced band of taka 57.40 to 58.40 per US dollar.

The bank said it would still intervene by buying or selling dollars to maintain orderly market conditions.—Reuters