"BDT strengthens after years of decline"

Bangladesh’s currency, the taka, appreciated by 0.39 per cent in July to 122.3 per US dollar, marking its strongest level in recent years and stirring new implications for trade and remittance.

Economists and central bankers attribute the rebound to a mix of global dollar weakness, robust remittance inflows, and sluggish private-sector credit growth that curbed import demand.

The gain contrasts sharply with the taka’s broader trajectory: it depreciated 3.89 per cent in FY2025 and 8.17 per cent in FY2024.

“When a domestic currency appreciates, imports become cheaper while exports and remittances turn costlier,” a central banker explained, adding: “Foreign-exchange reserves remain stable, import demand is weak, and that has pushed the taka up.”

As of August, reserves stood at $30.83 billion in gross terms, or $25.82 billion under the IMF’s BPM6 measure. The central bank has also purchased around $700 million since July, further bolstering its position.

The rebound comes after the central bank introduced a more flexible exchange-rate regime in May — a key condition of the $4.7 billion IMF loan package. It also marks a sharp break from the currency’s weakening trend since 2022.

Some economists view the appreciation as a potential relief for inflation in an import-dependent economy. Others remain cautious about its sustainability.

Dr. Zahid Hussain, former lead economist of the World Bank’s Dhaka office, pointed to both positive and negative factors behind the dollar’s decline: “Demand for dollars has weakened as private investment remains stalled. Imports tied to capital machinery have slumped, with private-sector credit growth dropping below 7 per cent in June.”

He also questioned the central bank’s intervention, suggesting that letting the dollar rate slide further might help contain inflation.

Globally, analysts say the greenback has weakened amid uncertainty in US trade policy under President Donald Trump, whose abrupt tariff measures rattled investor confidence in the dollar. Many investors have since shifted towards gold and alternative currencies such as the euro.