Bangladesh Foreign Exchange Dealers' Association (BAFEDA) was formed in a bankers’ meeting held on August 12, 1993 in the Board Room of Rupali Bank Ltd. to help the development of an orderly inter-bank foreign exchange market in Bangladesh. The Managing Directors/ Chief Executives/ Representatives of all the 23 banks, then operating in Bangladesh, attended the meeting and these banks became founder members of the Association. Subsequently, Bangladesh operation of ANZ Grindlays Bank plc. and American Express Bank Ltd. were taken over by Standard Chartered Bank and as such the first mentioned 2 banks ceased to be members of BAFEDA. Commercial Bank of Ceylon Ltd. acquired BAFEDA membership in place of Credit Agricole Indosuez on taking over Bangladesh operation of the later while Al Baraka Bank Bangladesh Ltd. was renamed as ICB Islamic Bank Ltd.. Between the years 1995-2005, 20 banks joined the Association. Of them, Bangladesh operation of Muslim Commercial Bank Ltd. was taken over by Bank Asia Ltd. who became member of BAFEDA in place of the former. In the year 2006, 3 banks joined the Association raising the membership of BAFEDA to 44 banks as shown in Annexure I.

The Association was incorporated as a non-profit organization under the Companies Act (Act XVIII) of 1994 on March 30, 1998.

With assistance and cooperation of all our member banks under the guidelines of Bangladesh Bank to develop an active foreign exchange market in the country and contribute significantly to the national economy.

According to the Constitution of Bangladesh Foreign Exchange Dealers' Association, the objectives of the Association are:

For smooth functioning of the inter-bank foreign exchange market, a "Code of Conduct" for Bangladesh Inter-Bank Foreign Exchange and Treasury Operations and also “BAFEDA Rules” were formulated earlier, with the approval of Bangladesh Bank. But it has been found necessary to revise & update the ‘Code of Conduct for Treasury Operations’ and ‘BAFEDA Rules’. Accordingly, BAFEDA Guidelines for foreign exchange Transactions has been framed incorporating the provisions of 'Code of Conduct for Treasury Operations' and 'BAFEDA Rules' with necessary amendments.