After remaining stable between Tk120 and Tk122 for a long time, the price of the US dollar has started rising again.
Within a span of a week, the price of each dollar to settle import liabilities has increased by nearly Tk1.
Currently, the interbank exchange rate stands at Tk124.35 per dollar.
In some cases, the rate for settling import letters of credit (LCs) has exceeded Tk124.90.
In the open market, buyers are having to shell out over Tk128 per dollar.
This market pressure has been generated due to the requirement of additional dollars to settle import liabilities for fuel oil, liquefied natural gas (LNG), and other commodities.
Although export and remittance earnings have increased against this backdrop, the supply of dollars is failing to keep pace with demand.
Data on foreign exchange transactions from Bangladesh Bank also reveals a widening gap between import and export earnings.
During the first three months (July–September) of the current FY27, merchandise import expenses reached $1.933 billion.
Compared to the corresponding period of the previous fiscal year, these expenses rose by 15.10%.
Conversely, export earnings grew by 7%. During this period, $1.186 billion came from exports, resulting in a trade deficit of $7.47 billion for the three months.
In the same period of the previous fiscal year, this deficit was $5.71 billion.
This means the trade deficit has increased by $1.76 billion within a year.
Petroleum products played the largest role behind this upward trend in import expenses.
In the first quarter, expenses for importing petroleum products exceeded $4.22 billion.
In the corresponding period of the previous fiscal year, expenses in this sector were less than $2.06 billion.
In other words, fuel import expenses have surged by more than 105% in a year.
Bankers stated that this expenditure has grown due to rising global oil prices and purchasing LNG at higher prices from the spot market. Additional dollars are also required to pay off LNG import liabilities.
Along with fuel, the import of essential commodities is also increasing pressure on the dollar market. In the first three months, expenses for consumer goods imports rose by 26.50%, costing the sector $1.40 billion.
Ahead of Ramadan, traders are preparing to open new LCs for items such as edible oil, sugar, lentils, and chickpeas.
Bankers apprehend that this will further drive up the demand for dollars.
On the other hand, capital machinery imports declined by 13.60%. This indicates that while spending on consumer goods and fuel is growing, imports of capital machinery related to production and investment are dropping.
Remedies
To increase the supply of dollars in the market, Bangladesh Bank is selling dollars from its reserves.
Last Wednesday, the central bank sold $120 million to commercial banks through an auction, with exchange rates ranging from Tk124.30 to Tk124.35 per dollar.
However, market pressure cannot be fully managed solely through the supply of dollars from reserves.
According to the latest figures, the country's total foreign exchange reserves have dropped to $34.85 billion.
Meanwhile, Bangladesh Bank has warned commercial banks regarding the rising trend in dollar prices.
Recently, during a meeting with the managing directors of banks, Governor Md Mostaqur Rahman stated that dollar prices should not rise to such an extent given that banks' net open position (NOP) remains positive.
He emphasized the need to remain vigilant so that no party can create instability in the market under the pretext of a crisis.
Arief Hossain Khan, executive director and spokesperson of Bangladesh Bank, told reporters that the central bank is examining whether coordinating institutions and bankers have any role beyond logical reasons behind the hike in dollar prices. Action will be taken if anyone's involvement is found.
Regarding the price hike of dollars in the open market, MS Zaman, president of the Money Changers Association of Bangladesh, said that dollar prices have increased everywhere, including banks.
A sudden surge in demand has caused some supply issues, but he hoped that the situation will normalize soon.
