News Highlights
Bangladesh Bank has bought nearly $1.9 billion from local banks within three months to rebuild foreign exchange reserves, raising questions amid high inflation and rising living costs. The move reflects lessons from the Covid period, when an artificially fixed exchange rate weakened purchasing power during global shocks. By allowing the dollar rate to be driven by market supply and demand, the central bank aims to stabilise reserves and ensure the ability to pay for essential imports such as fuel, food, and medicine. While the strategy increases pressure on importers and consumers in the short term, it benefits exporters and remittance earners and may attract foreign investment. Policymakers view the current hardship as a calculated trade-off for long-term currency stability and economic resilience.
Making Sense of BB’s Currency Play
– Written by , Co-founder and CEO of Accfintax
In just under three months, the Bangladesh Bank has purchased nearly $1.9 billion from local banks this fiscal year, including $265 million in a single day and $129.5 million through an auction last week. For many people, this seems puzzling. Prices are still rising, families are cutting down on essentials, and yet the central bank is spending heavily to buy dollars instead of allowing the Taka to strengthen and make imports cheaper.
Around the world, many argue the dollar is losing its shine, but it remains the currency that drives trade, settles debt and secures investor trust. For a country like Bangladesh, which buys far more than it sells, keeping a steady flow of dollars is still vital. The question is: why now, and why so aggressively?
To make sense of this, it helps to look back a few years. During the Covid period, Bangladesh recorded strong remittances and export earnings, but the exchange rate was held almost fixed. It seemed stable at the time, but when the Ukraine war began and global prices surged, both importers and exporters suddenly lost purchasing power. Loans sanctioned in Taka could buy far less, forcing businesses to cut production and slow operations. That is one of the key reasons the economy is still struggling to regain momentum. Had the Taka been allowed to appreciate slightly back then, the country might have entered this global crisis with stronger reserves and a little more room to manoeuvre.
The Bangladesh Bank appears to have learned that lesson. By buying dollars now, it is rebuilding the emergency tank. Strong reserves mean the country can pay for fuel, medicine and food without panic if global markets turn volatile again. This time, the central bank is letting the dollar price reflect supply and demand rather than holding it down artificially. That is a significant shift, one many economists had urged for years.
Read the full original column by Ahmed Humayun Murshed in The Daily Star:
🔗 Making Sense of BB’s Currency Play