Written by The Banking Post
The US dollar has depreciated sharply against the taka over the past week, dropping by about Tk2.90 as market demand cooled and remittance and export inflows strengthened.
On Thursday, banks were offering Tk120 per dollar for remittance purchases, down from Tk122.80–122.90 just a week earlier. Some banks even bought at Tk120.50, though forex houses noted that despite rates initially being 20–50 paisa higher on Thursday morning, no bank was willing to pay above Tk120 by the end of the day.
Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank, said banks are seeing significantly less demand for dollars. “As the rate keeps falling, many banks are reluctant to hold dollars and are trying to offload them,” he told The Business Standard.
Industry insiders attribute this slide to reduced import LC openings and steady remittance and export inflows. “Previously, banks used to call us asking for dollars, but this week the opposite happened,” said the country head of a major forex house. “I offered $10 million to a bank, but they only agreed to buy $1 million.”
A deputy managing director of a private bank added that an exchange house offered to sell $5 million at Tk120.80 on Thursday afternoon, but the offer was declined in anticipation of further price declines. “If we buy at a higher rate now, we’ll have to sell at a loss,” he noted.
Since early December, the dollar-taka rate had spiked twice to a historic Tk128 before Bangladesh Bank intervened. The market later moved to a market-based exchange rate regime in mid-May, following IMF conditions, leading to an overall downward trend.
Previously, persistent dollar demand stemmed from overdue government import payments, forcing state-owned banks to aggressively buy dollars to clear backlogs. “At one point, these banks were buying up to $1 billion in a single month,” said a senior banker. Now, with overdue payments largely cleared, demand from state-owned banks has eased significantly.
Meanwhile, private investment remains sluggish, keeping demand for capital machinery and raw materials imports low. “Most current imports are essential consumer goods, which don’t fluctuate much,” noted another bank MD.
With strong remittance flows and solid export earnings, market players expect the dollar price to slide further in the short term—unless Bangladesh Bank steps in to buy dollars from the market, which could stabilise or slightly push up the rate.
