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The US dollar has resumed its upward trend in Bangladesh over the past three to four weeks as rising import payment obligations, weaker remittance inflows, slower export earnings and changing market expectations increase pressure on the foreign exchange market.

Several commercial banks on Sunday purchased remittance dollars from exchange houses at Tk123.75 per US dollar, about 10 paisa higher than in early July. Bangladesh Bank data also showed the interbank exchange rate rose 75 paisa over the past week to Tk123.60.

Although the central bank had maintained a benchmark interbank rate of Tk122.85 for an extended period, treasury officials said actual transactions were rarely conducted at that level.

According to Bangladesh Bank data, import payments accelerated sharply in June, with letters of credit (LCs) worth more than $7 billion settled during the month. Government imports accounted for a significant share, while higher global prices of fuel and fertiliser—partly driven by tensions in the Middle East—further increased demand for US dollars.

Many import orders opened in March and April became due in June and July, as LCs are typically settled one to three months after opening. In addition, a large number of Usance Payable at Sight (UPAS) LCs opened during Ramadan matured in June, with some continuing to be settled this month, sustaining pressure on the foreign exchange market.

At the same time, foreign currency inflows have weakened. Bangladesh received $2.82 billion in remittances in June, the lowest monthly inflow in eight months.

Export receipts have also declined. Merchandise exports fell by $4.2 billion in FY2025–26 compared with the previous fiscal year, reducing the supply of foreign currency in the banking system.

Bangladesh Bank’s latest economic data show LC settlements reached $70.4 billion in FY2025–26, slightly higher than $70.3 billion a year earlier, indicating that import demand remained resilient despite weaker export performance.

Bankers also pointed to intense competition among some commercial banks to secure remittance dollars. Treasury officials said some banks are offering higher rates to attract remittance inflows while selling dollars at relatively lower prices for government LC payments, creating distortions in the foreign exchange market.

Market expectations have also shifted following recent discussions between Bangladesh Bank and the International Monetary Fund (IMF). Officials said the IMF questioned why the central bank’s dollar purchases through auctions had remained within a narrow price range.

Following the discussions, Bangladesh Bank began publishing the prevailing interbank exchange rate instead of the previous benchmark rate, reinforcing expectations of a more market-based exchange rate regime.

A senior Bangladesh Bank official said the central bank is avoiding informal intervention in exchange rate determination while negotiations continue for a new IMF loan programme, encouraging exchange houses to seek market-based prices for remittance dollars.