Bangladesh Bank scoops up nearly $1b from market amid dollar slide

The Bangladesh Bank (BB) has bought nearly $1 billion from the market in just six weeks as the dollar weakened against the taka amid steady inflows and muted import demand.

Between July 13 and August, the central bank purchased $948 million from commercial banks through seven auctions—reversing its earlier policy of selling dollars to stem the taka’s depreciation and to help state agencies cover import bills. Over the past three fiscal years, BB had sold over $25 billion from reserves, mostly to finance imports of fuel, fertiliser, and food.

Economists warn that a weaker dollar could undermine remittances and exports. Officials say the central bank’s recent purchases aim to stabilise the foreign exchange market, rebuild reserves, and prevent excessive fluctuations.

Dollar sales to state agencies were suspended last August after the fall of the Awami League government, when reserves were under severe strain. Since then, stronger remittance inflows and improved export earnings have eased pressure, allowing reserves to climb back to $26.19 billion by August 28—up from $20.59 billion a year earlier, IMF data show.

In May, BB shifted to a floating exchange rate as part of IMF loan conditions, following last year’s crawling peg system. However, officials maintain an informal band, intervening if the dollar crosses Tk 123 or falls below Tk 121. On Monday, the dollar traded at Tk 121.72.

BB spokesperson Areif Hussain Khan said the central bank steps in to curb volatility: “Neither a steep rise nor a sharp fall is healthy. If the dollar weakens too much, exporters and remitters lose out.”

Ashikur Rahman, principal economist at the Policy Research Institute, noted that weak investment and lower imports of capital machinery have curbed dollar demand. “In this situation, the taka would appreciate, which discourages exports and remittances. By buying dollars, BB is creating artificial demand to keep them competitive and rebuild reserves. This strategy will help the authorities absorb any shocks over the next six months.”