There are many problems in science and engineering where the solution shows a boundary layer character. Near the boundary the gradient is large in contrast with the smooth behaviour in the central core. A uniform grid is, therefore, not suitable for a numerical solution. MHD flow problems belong to this category where a velocity and induced magnetic field profiles get flattened in a transverse flow. In the present paper an optimized grid has been generated using interpo-lating wavelets. The results are compared with those obtained using uniform grid, the finite element method and also from the analytical solution.