Written by The Banking Post
Bangladesh’s exporters got a modest lift in December as the Taka’s real effective exchange rate (REER) declined, slightly easing pressure on the currency and improving its external competitiveness.
Latest data from Bangladesh Bank show the REER index fell to 102.11 in December 2025 from 103.55 in November. Although the Taka remains somewhat overvalued, the gap has narrowed.
The drop reflects a technical rebasing of the REER to 2023–24 and a more favourable inflation differential with major trading partners. Economists say the adjustment offers cautious optimism for trade and the foreign exchange market, provided stability holds.
The REER measures the value of the Taka against a basket of 17 key trading partners, which together account for more than 80 per cent of Bangladesh’s external trade. A reading below 100 generally signals stronger export competitiveness, while a level above 100 indicates a relatively stronger currency, making exports less competitive and imports cheaper.
Based on the December reading, the dollar’s equilibrium rate was estimated at Tk124.86 against the prevailing market rate of Tk122.29. This suggests the Taka was overvalued by around Tk2.57 during the month.
Central bank officials said the index was rebased in December using updated inflation data from peer economies to better reflect current external competitiveness.
“The old base year showed a higher REER. The new base offers a more practical and realistic assessment,” a central bank official said.
Dr M. Masrur Reaz, Chairman and Chief Executive Officer of Policy Exchange Bangladesh, said the revised base year allows a more accurate comparison between equilibrium and nominal exchange rates, helping narrow the apparent gap.
He added that export prospects could improve further if the government reduces the cost of doing business.
Dr Md Ezazul Islam, Director General of the Bangladesh Institute of Bank Management, said the updated index also factors in stronger remittance inflows, which helped pull the REER down.
“Higher remittance inflows and a favourable balance of payments have supported the recent decline,” he said, noting that sustained macroeconomic stability will be key to preserving the gains in export competitiveness and the foreign exchange market.
