Bangladesh Bank’s aggressive dollar purchases have evolved into a crucial liquidity lifeline for cash-strapped lenders, with stressed banks increasingly relying on foreign-exchange sales to keep daily operations running even as bad loans and provisioning gaps remain elevated, industry insiders say.
The central bank’s guided intervention in the interbank foreign-exchange market, aimed at stabilising the taka under the crawling-peg regime, has helped shore up reserves while simultaneously easing local-currency pressure on banks struggling with liquidity amid prolonged economic sluggishness.
Bangladesh Bank plans to sustain the buying momentum, targeting a further $300 million through three auctions over the next 10 working days, according to officials familiar with the programme. This would take the central bank’s total dollar purchases in December alone to about $1 billion.
Market participants said the intervention has created a dual-track effect: the regulator continues to build foreign-exchange reserves, while banks facing liquidity strain use the window to meet taka obligations by selling dollars from their vaults, reducing dependence on central bank borrowing and limiting additional money creation.
Industry insiders said Islami Bank Bangladesh PLC has been the single largest seller of dollars to the central bank during the current round of intervention. They noted that a significant share of the bank’s day-to-day transactions is now being financed through liquidity generated from dollar sales.
As a result, despite carrying a large volume of classified loans and the highest provisioning shortfall in the banking sector, the bank has so far been able to continue regular operations without disruption, the insiders added.
According to Bangladesh Bank data, the central bank has purchased a total of $2.87 billion from commercial banks since July 13, injecting more than Tk 34,980 crore into the banking system in exchange for dollars so far in fiscal year 2025-26.
Following these transactions, gross foreign-exchange reserves stood at $32.53 billion under the central bank’s own calculation method, while reserves measured under the IMF’s BPM6 methodology were $27.88 billion as of December 18, 2025. At the end of November, reserves stood at $31.09 billion and $26.39 billion respectively.
A Bangladesh Bank official, speaking on condition of anonymity, said the market-based intervention is helping stabilise the taka-dollar rate and preventing excessive volatility.
“Remittance inflows continue rising due to improved returns, while exporters are also encouraged to bring back more export proceeds,” the official said.
The easing of liquidity pressure is reflected in the steady decline in banks’ reliance on central bank funding. Commercial banks borrowed Tk 2.54 trillion through various liquidity-support instruments in August 2025. The figure fell to Tk 1.61 trillion in September, Tk 1.02 trillion in October and Tk 1.0 trillion in November, according to central bank data.
Economists say beyond strengthening reserves, the intervention is also helping preserve export competitiveness by keeping the exchange rate broadly stable at a time when global dollar depreciation pressures persist.
