After four consecutive days of decline, the US dollar surged in Bangladesh`s interbank currency market on Tuesday (July 15), with the average exchange rate climbing by Tk 1.40 to reach Tk 121.11.
According to data from Bangladesh Bank, the day’s lowest and highest rates were Tk 120.80 and Tk 121.50 respectively—compared to Tk 119.50 and Tk 120.10 on Monday.
The recent fall in the dollar’s value was driven by strong inflows of remittances and export earnings, which had brought temporary relief to importers.
However, concerns began to grow over the potential negative impact on export competitiveness and remittance inflows. In response, the central bank introduced a new strategy to restore balance in the forex market.
On Sunday (July 13), Bangladesh Bank conducted its first-ever dollar buyback auction, purchasing $171 million from commercial banks.
This move boosted demand in the market and halted the decline in the dollar’s value—widely seen as a key factor behind Tuesday’s surge.
Despite the spike in the interbank rate, the open market exchange rate has remained relatively stable.
Experts warn that a sustained drop in the dollar’s value could harm the country’s foreign income streams, even as it helps reduce import costs.
To avoid such long-term risks, the central bank has stepped in to maintain a balanced exchange rate through policy interventions.
Bankers note that dollar supply has improved due to a slowdown in import activities, a drop in LC (letter of credit) openings, and continued growth in remittance and export earnings. As a result, many banks are now more inclined to sell their surplus dollars.
Bangladesh Bank officials argue that without curbing the unexpected depreciation of the dollar, inflation control efforts—one of the key goals of the current caretaker government—could face serious challenges.
Thus, the central bank’s decision to buy dollars from the market is aimed at maintaining price stability and market balance.
Economists believe that a stable and well-regulated exchange rate, supported by prudent policy, can help restore confidence in the foreign exchange market while aiding inflation control.
However, they caution that any central bank intervention should be executed carefully to prevent abrupt shocks to the market.
