Taka gains against dollar after several years

The local currency has started to strengthen against the US dollar for the first time in several years, as the official exchange rate dropped by Tk 2.20 over the past five days amid a growing inflow of greenbacks.

As of today, the inter-bank exchange rate for selling the US dollar stood at Tk 120.1, down from Tk 122.3 on July 9, according to the latest data from the Bangladesh Bank.

The buying rate at the inter-bank level was Tk 119.5 per dollar.

Since the Covid-19 pandemic, the taka began weakening against the dollar in 2022 due to instability in the foreign exchange market, driven by turmoil in both global and local economies. Since July that year, the Bangladeshi currency has depreciated by about 30 percent.

Industry insiders attributed the recent appreciation to several factors: a surge in remittance inflow following the political changeover, a decline in illegal cross-border transactions and money laundering, and the disbursement of funds from multilateral lenders.

In fiscal year 2024–25, remittances to Bangladesh hit a record $30.32 billion, marking a 26.81 percent—or $6.4 billion—year-on-year increase, as per Bangladesh Bank data.To meet the conditions of a $4.7 billion loan programme from the International Monetary Fund (IMF), the central bank in May adopted a more flexible exchange rate regime following months of stalemate.

Although bankers initially feared the move would fuel further depreciation, it helped stabilise the market instead, said a senior official of the Bangladesh Bank. The stability also contributed to a rise in the country's foreign currency reserves, he added.

As of July 10, Bangladesh's foreign exchange reserves stood at $24.54 billion (BPM6), up from $21.06 billion a year earlier.In response to the rapid decline in the dollar rate, the Bangladesh Bank began purchasing greenbacks from the market on July 13.The central bank bought $171 million through an auction from 18 commercial banks, the first such move under the newly introduced floating exchange rate regime.

Bangladesh Bank Executive Director and Spokesperson Areif Hussain Khan told The Daily Star that the dollar's falling trend was not a positive sign for the market, prompting the regulator to step in."We want to keep the forex market stable, because both a rise and a fall are not good indicators," he said. "If the dollar weakens too much, exporters and remitters feel discouraged and suffer losses.""We purchased $171 million from 18 commercial banks, and the cut-off rate was Tk 121.5 per dollar," he added.