Dollar turns volatile under import pressure, up nearly one taka in a week

After remaining stable between 120 and 122 taka for a long time, the price of the dollar has started rising again. In the space of a week, the price of each dollar has gone up by nearly one taka to settle import dues.

At present, the rate of the dollar in transactions between banks is 124 taka 35 paisa. In settling import letters of credit (LCs), the price has risen above 124 taka 90 paisa in some places. In the open market, buying each dollar costs more than 128 taka.

The pressure in the market has been created by the extra dollars needed to pay for imports of fuel oil, liquefied natural gas (LNG) and other goods. Although exports and remittance earnings have risen, the supply of dollars is not keeping pace with demand.

Bangladesh Bank’s balance of payments data also shows the gap between import spending and export earnings widening. In the first three months of the current 2026-27 fiscal year (July-September), spending on goods imports was 19.33 billion dollars, up 15.10 percent on the same period of the previous fiscal year.

Export earnings, by contrast, rose 7 percent. Exports brought in 11.86 billion dollars over the period. As a result, the trade deficit for the three months stood at 7.47 billion dollars, against 5.71 billion dollars in the same period last fiscal year — an increase of 1.76 billion dollars in one year.

Fuel products played the biggest role behind the rise in import spending. In the first quarter, more than 4.22 billion dollars was spent on importing petroleum products, against less than 2.06 billion dollars in the same period last fiscal year — a rise of more than 105 percent in one year.

Bankers said the spending rose because of higher fuel oil prices in the international market and the purchase of LNG at higher prices from the spot market. Extra dollars are also needed to pay LNG import dues.

Alongside fuel, imports of essential consumer goods are also adding pressure to the dollar market. In the first three months, spending on consumer goods imports rose 26.50 percent, to 1.40 billion dollars.

With Ramadan ahead, traders are preparing to open new LCs for products such as edible oil, sugar, lentils and chickpeas. Bankers fear this will push dollar demand up further. Capital goods imports, on the other hand, fell 13.60 percent — so while imports linked to production and investment fell, spending on consumer goods and fuel rose.

Although remittance inflows are growing, they are not enough to absorb the pressure of import spending. According to Bangladesh Bank, expatriates sent home 8.59 billion dollars in the first three months of the fiscal year, up 13.30 percent on the same period last year. But the rate of growth in import spending is higher than the growth in exports and remittance earnings.

The effect is visible in the external balance. The current account deficit in the first quarter stood at 1.33 billion dollars, against 0.82 billion dollars in the same period last year. The overall balance of payments also recorded a deficit of 1.16 billion dollars, against a surplus of 0.85 billion dollars in the same period last fiscal year.

To increase the supply of dollars in the market, Bangladesh Bank is selling dollars from the reserves. Last Wednesday, the central bank sold 120 million dollars to commercial banks through an auction, at 124 taka 30 paisa to 124 taka 35 paisa per dollar. But even with dollars supplied from the reserves, the market pressure cannot be fully contained. According to the latest figures, the country’s total foreign exchange reserves have fallen to 34.85 billion dollars.

Bangladesh Bank has warned the banks over the rising trend in the dollar’s price. At a recent meeting with the managing directors of banks, Governor Md Mostakur Rahman said that even though banks’ net open positions (NOP) remain positive, the dollar should not have risen this much. He said vigilance is needed so that no party can create instability in the market using the crisis as an excuse.

Arif Hossain Khan, executive director and spokesperson of Bangladesh Bank, told Ajker Patrika that the central bank is examining whether any coordinating institution or bankers played a role beyond justified reasons in pushing up the dollar’s price. Action will be taken if anyone’s involvement is found.

On the rise in the dollar’s price in the open market, M S Zaman, president of the Money Changers Association of Bangladesh, said the price of the dollar has risen everywhere, including at banks. The sudden rise in demand is causing some supply problems, but he hoped the situation would return to normal soon.

To keep the supply of essential goods normal and control price rises in the market during the coming month of Ramadan, Bangladesh Bank has given special facilities for importing 10 products. It has directed that the cash margin for opening LCs for these products be kept at the minimum level based on the banker-customer relationship.