Bangladesh Bank has started purchasing US dollars from the interbank market to stabilise the taka and rebuild foreign exchange reserves after a period of heavy dollar sales. The intervention comes as export and remittance inflows improve and the local currency shows signs of recovery. By buying dollars, the central bank aims to prevent the taka from appreciating too quickly, which could hurt export competitiveness, while also shoring up reserves for future obligations. Recent purchases of $484 million helped reverse a short-term decline in the taka, highlighting Bangladesh Bank’s efforts to balance exchange rate stability, reserve growth, and market confidence amid persistent inflation and economic pressures.
Bangladesh Bank is actively purchasing US dollars from the interbank market to stabilise the local currency, the taka, and rebuild its dwindling foreign exchange reserves. After a prolonged period of selling dollars to support the taka amid high import bills and reduced remittance inflows, the central bank has now shifted gears as the balance of payments shows signs of improvement.
The move comes as the local currency strengthens slightly and inflows from exports and remittances pick up. By buying dollars, the central bank aims to prevent the taka from appreciating too rapidly, which could hurt export competitiveness, while also shoring up reserves needed to meet future external payment obligations.
This intervention also signals confidence in the foreign exchange market and forms part of Bangladesh Bank’s broader strategy under the IMF-backed reform program, which includes maintaining exchange rate flexibility while ensuring market stability.
In recent weeks, the central bank has purchased millions of dollars, reversing a trend of heavy dollar sales over the past two years, which had contributed to a sharp decline in reserves.
After years of steady depreciation that saw the taka lose nearly 30% of its value against the US dollar since the COVID-19 pandemic, Bangladesh’s currency is finally showing signs of recovery. But in a surprising move, the Bangladesh Bank has intervened to curb the dollar’s decline—prompting questions about the timing and implications for the broader economy.
The prolonged strength of the dollar has been a major source of economic stress in Bangladesh, driving up import costs and fueling inflation, which has stubbornly hovered above 9% since March 2023. Although inflation eased slightly to 8.48% in June, household budgets remain under pressure.
Economists and policymakers have long identified the high exchange rate as a key driver of inflation. Import-heavy industries have struggled under the burden of an expensive dollar, while exporters and remittance earners have enjoyed short-term gains.
Now, just as the taka began regaining ground, the central bank acted decisively—buying $484 million from commercial banks over just two days. This came as the exchange rate fell by more than Tk 2 in five days, reaching Tk 120 per dollar. Following the intervention, the interbank dollar rate rebounded to Tk 121.20 on Wednesday.
The move suggests that Bangladesh Bank is seeking to strike a delicate balance—supporting foreign exchange reserves and maintaining export competitiveness, while preventing excessive volatility in the currency market.
