Bangladesh Bank has intensified its purchase of US dollars in the foreign-exchange market, aiming to boost foreign exchange reserves and stabilise the taka after years of steady depletion.
On September 4, the central bank bought $134 million in an auction from five commercial banks, setting a cut-off rate of 121.75 taka per dollar. Less than a week later, on 9 September, it bought an additional $265 million.
The interventions have brought total dollar purchases to nearly $1.4 billion since mid-July, signaling a renewed focus on rebuilding foreign-currency reserves.
This latest round of purchases comes shortly after Bangladesh made a $1.5 billion payment to the Asian Clearing Union on 7 September, which reduced the country’s gross reserves to $30.31 billion from $31.43 billion earlier in the month. Despite the decline, officials emphasized that reserves remain above the $30 billion level, which is widely considered a minimum safeguard.
However, under the International Monetary Fund’s (IMF) BPM6, the reserve was at $25.4 billion on 7 September.
The central bank’s greenback purchase trend marks a clear reversal from recent years, during which Bangladesh Bank was a consistent seller of dollars. Between 2022 and 2024, the central bank sold over $30 billion to banks for financing imports of fuel, food, and raw materials during a period of high global prices.
While these sales provided short-term relief for banks and importers, they significantly depleted reserves, which fell from a record $48 billion in 2021 to less than $27 billion by late 2023.
By buying dollars, Bangladesh Bank aims to achieve two objectives—rebuilding reserves and preventing the taka from appreciating too quickly.
A stronger taka, officials and analysts warn, could reduce export competitiveness and weaken incentives for remittances.
The central bank’s dollar purchases have contributed to greater stability in the foreign exchange market.
In mid-July, the taka briefly strengthened to around 119.73 per dollar, its strongest level in over a year, which brought the central bank into the dollar purchase scheme. By the end of that month, it had settled closer to 122.30 per dollar.
Since late August, the weighted average reference rate published by Bangladesh Bank has fluctuated within a narrow band of 121.61 to 121.86. On 9 September, the day of the $265 million purchase, the rate closed at 121.73.
Dealers have noted a slowdown in interbank spot trading in recent weeks as liquidity conditions have eased, with the central bank absorbing surplus dollars from the banking system.
Bangladesh’s gross reserves, totaling around $30 billion, provide sufficient coverage for six to eight months of imports, offering greater resilience compared to some regional peers.
In contrast, India’s reserves stand at about $694 billion, covering a year of imports. Pakistan’s reserves are around $19.6 billion, leaving the country reliant on IMF support, while Sri Lanka holds only about $6.1 billion following its 2022 default. Nepal’s reserves are also in the single-digit billions.
While Bangladesh’s reserves are smaller than India’s, they remain significantly stronger than those of several neighboring countries, positioning Bangladesh better to weather external pressures, including energy imports, global inflation, and a strong US dollar.
