Bangladesh Bank has re-entered the foreign exchange market, purchasing 50 million US dollars from commercial banks through an auction after a lull of nearly three and a half months. The central bank conducted the transaction on Tuesday afternoon in response to an increasing supply of greenbacks, which had begun exerting downward pressure on exchange rates.
Spokesman Arif Hossain Khan confirmed the operation, marking the central bank’s first dollar purchase from commercial lenders since 20 May.
Trading on Tuesday morning opened on a subdued note across domestic dealing desks. Commercial lenders were initially sourcing remittance inflows from overseas exchange houses at rates ranging between Tk 122.30 and Tk 122.40 per dollar. For clearing import liabilities through letters of credit (LCs), the prevailing exchange rate hovered between Tk 122.50 and Tk 122.60.
The market trajectory shifted around midday after Bangladesh Bank announced its decision to buy dollars at a fixed rate of Tk 122.75. The intervention provided an immediate floor for the currency. By late afternoon, several commercial banks adjusted their rates upward to match the central bank’s benchmark for both remittance collection and LC settlements.
Treasury officials observed that the timing of the notification was somewhat unusual. Bangladesh Bank communicated its purchase decision to commercial lenders around 1:00 pm, whereas such directives are typically issued at the start of the trading day. Consequently, early-morning corporate import obligations were settled at the lower rates prevailing prior to the announcement.
The central bank routinely buys foreign currency to bolster official reserves when market supply is high, and sells dollars when liquidity tightens to stabilize the local currency. This latest intervention addresses sharp fluctuations in the market over recent weeks. Exchange rates dropped near Tk 122 per dollar a fortnight ago before surging to Tk 123.65 by the end of last week—a variance of nearly one and a half Taka in a very brief window.
Such exchange rate volatility complicates cost predictions for importers, exporters, and commercial banks alike. To hedge against sudden rate spikes and lock in predictability for future import obligations, an increasing number of corporate clients are turning to forward booking arrangements with their bankers.
Ultimately, Bangladesh Bank’s $50 million purchase serves a dual purpose: expanding foreign currency reserves while signalling a clear price floor to prevent erratic currency depreciation.
