The interbank exchange rate has surged to Taka 111 per dollar, reflecting a steady increase amid the ongoing dollar crisis in the country’s financial market.
This crisis has led to a significant devaluation of the Taka over the last two years.
To provide context, the exchange rate stood at Taka 96 per dollar in September 2022 and Taka 85.5 per dollar in September 2021. However, some banks have been seen collecting remittances at rates as high as Taka 114-117 per dollar, while on the open market, dollars are being traded at Taka 119-121 each.
The repercussions of this sharp depreciation in the exchange rate have rippled across various sectors of the economy. Businesses are grappling with elevated import costs and difficulties in acquiring foreign currencies, according to economists.
Like many other countries, Bangladesh has foreign debt denominated in US dollars. As the Taka continues to depreciate, it necessitates a larger amount of Taka to service the same foreign debts in dollars.
This situation can lead to individual debt repayment obligations for both the government and businesses, creating additional financial strain.
The ongoing dollar crisis can be attributed to several factors, including a substantial disparity between the supply and demand for dollars within the country.
Depletion of foreign exchange reserves, coupled with a sluggish inflow of remittances and export earnings, is exacerbating the imbalance in the foreign exchange market.
In an attempt to stabilize the foreign exchange market, the central bank has divested over US $25 billion from its reserves in the past 27 months.