As the government’s clampdown on money laundering takes effect, both remittance inflows and export earnings have risen. This has increased the supply of US dollars in the market.
Generally, such a scenario would drive the dollar’s exchange rate down. However, Bangladesh Bank is currently intervening to keep the rate stable by buying up excess dollars.
For this, the central bank on Monday purchased $353 million (35.3 crore) from 26 commercial banks at a rate of Tk 121.75 per dollar.
With this latest transaction, the central bank has so far bought over $1.747 billion (over 174 crore) in the current financial year.
As a result, foreign exchange reserves are rising, while the dollar price remains above Tk 120, according to central bank sources.
Bangladesh Bank is now monitoring the movements of currencies of the country’s major trading partners daily, alongside supply, demand and pricing trends of dollars in the domestic market.
Each morning, it publishes a reference rate for the dollar. Should the domestic rate fall below that benchmark, the central bank calls an auction to buy up dollars.
According to official data, since July the central bank has been consistently buying dollars from banks with surplus holdings. Those banks have participated in auctions to sell dollars to Bangladesh Bank.
This mechanism has made the dollar price effectively market-determined, one of the core conditions of the International Monetary Fund (IMF).
Bangladesh’s reserves are currently higher than the stipulated minimum requirement, set under the loan programme of the global lender.
With reserves recovering and the dollar easing from March this year, the bank reversed course and began buying dollars from the market.
Dollar prices began rising in Bangladesh in 2022 in the fallout of the Russia–Ukraine war, when supply shortages and rising demand pushed the exchange rate from Tk 85 to Tk 122 per dollar.
Following this price spike, inflation surged, squeezing household budgets. Despite heavy interventions, including selling dollars from reserves, Bangladesh Bank failed to contain the price rise.
Over the past three fiscal years, the central bank sold more than $25 billion from reserves, mainly to cover import bills for fuel, fertiliser and food.
Following the ouster of the Awami League government in the August 2024 mass uprising, reserves fell so low that the central bank stopped providing dollars for government imports.
With reserves recovering and the dollar easing from March this year, the bank reversed course and began buying dollars from the market.
Meanwhile, remittance inflows have played the most important role in easing the dollar shortage. In FY2024–25, remittances reached $30.32 billion, nearly 27 per cent higher than the previous year.
In the first two months (July–August) of the current fiscal year (2025-26), remittances stood at around $5 billion, 18.41 per cent higher year-on-year.
Export earnings also grew by 7.72 per cent last year, while imports cost $68.35 billion, a 2.44 per cent increase on the previous fiscal year.