Dollar Rate Surges to Tk 129 in Open Market Amid Renewed Foreign Exchange Volatility
Fresh volatility has gripped Bangladesh’s foreign exchange market, with the US dollar suddenly climbing to Tk 129 in the open market. In contrast, banks are charging Tk 124.80 per dollar for settling import payments, leaving customers paying Tk 4.20 more per dollar in the open market. The widening gap signals renewed pressure on the foreign exchange market, raising concerns over higher import costs, increased demand for dollars to finance fuel and industrial raw materials, and imbalances between supply and demand. The pressure could eventually spill over into commodity prices and inflation.
The Money Changers Association of Bangladesh has warned that institutions attempting to sell dollars above Tk 128.10 could face financial penalties and strict legal action. Nevertheless, dollars continue to sell for Tk 129 in the open market. Bankers attribute the rising demand to higher international liquefied natural gas (LNG) prices and increased fuel import costs. Meanwhile, foreign currency inflows from exports, remittances and foreign loan disbursements have not increased sufficiently to match demand, creating supply constraints. According to bankers, dollar rates have also risen through banking channels in recent days. On Tuesday, commercial banks bought dollars from remittance collection agencies at a maximum rate of Tk 124.70. Banks’ purchase rates ranged between Tk 124.55 and Tk 124.60. Meanwhile, the exchange rate for settling letters of credit (LCs) for import payments rose to Tk 124.80, up from Tk 124.50 the previous day. According to Bangladesh Bank data dated November 4, the weighted average exchange rate in the interbank market stood at Tk 124.35 per dollar. However, the open-market selling rate of Tk 129 has created a substantial gap between the two markets, raising questions about actual foreign currency demand, supply and market management.
Why Are Dollar Prices Rising?
Bankers identify mounting import-payment obligations as a major factor behind the increase. Substantial foreign currency is required to import fuel and gas, forcing banks to secure dollars according to the payment schedules of the Bangladesh Petroleum Corporation (BPC) and Petrobangla. This has intensified demand in the market. Higher international energy prices also increase import bills, requiring more dollars to purchase the same volume of fuel. As energy imports remain essential for electricity generation, industrial operations and transportation, there is limited scope to reduce this demand. Bangladesh Bank data show that the country spent approximately US$2.50 billion on fuel imports during July and August, the first two months of the 2026-27 fiscal year, nearly double the US$1.25 billion spent during the same period a year earlier. Overall merchandise import expenditure also increased. Imports cost US$12.20 billion during July-August, around 12 per cent higher than the corresponding period last year. Rising import bills consequently increase banks’ dollar requirements. When supply fails to keep pace, upward pressure on exchange rates becomes inevitable.
Why Are Open-Market Rates Higher?
Differences in cash-dollar demand and supply partly explain why open-market rates exceed banking-channel rates. Cash dollars are required for overseas travel, medical treatment, education, personal expenses and other legitimate purposes. Limited cash supplies can allow sellers to demand higher prices. The Tk 129 open-market rate is Tk 4.20, or approximately 3.37 per cent, above the banking-channel rate of Tk 124.80. However, bank exchange rates and cash-dollar prices in the open market are based on different types of transactions, making some disparity normal. A persistent and widening gap, however, could indicate imbalances in the foreign exchange market.
Dollar Sales from Reserves Fail to Ease Pressure
Bangladesh Bank periodically sells dollars from its foreign exchange reserves to increase market supply and ease pressure on the exchange rate. However, when demand for import payments remains high, such interventions may provide only temporary relief. Last week, against demand of approximately US$800 million from commercial banks, Bangladesh Bank sold US$122 million. It subsequently invited bids for another US$100 million, but no dollars were sold, according to banking sources. As of October 26, Bangladesh Bank reported gross foreign exchange reserves of US$36.41 billion. Under the International Monetary Fund’s BPM6 methodology, reserves stood at US$31.60 billion. Foreign exchange reserves provide an important buffer for the economy. However, regularly selling dollars from reserves to meet market demand is not a sustainable long-term solution. Restoring balance between foreign currency earnings and expenditure remains more important.
Role of Remittances and Export Earnings
Remittances and exports are Bangladesh’s principal sources of foreign currency. Strong inflows from these sectors help increase market supply. However, when import expenditure rises faster than remittance and export earnings, pressure on the market intensifies. According to Bangladesh Bank data, remittance inflows recorded positive growth during the first two months of the current fiscal year, although monthly fluctuations remain. The country received US$2.77 billion in remittances in September and US$2.87 billion in October. Despite the increase in expatriate earnings, maintaining a balance with growing import-payment obligations remains essential. Export earnings are equally important for foreign currency supply. Higher receipts from the readymade garment and other export sectors strengthen banks’ capacity to collect dollars. Conversely, declining export earnings or delays in repatriating proceeds can create supply shortages.
Impact on Commodity Markets
A rise in the dollar exchange rate increases the amount importers must pay in local currency for the same volume of goods. Import costs could rise for fuel, edible oil, wheat, sugar, lentils, industrial raw materials, machinery and chemicals. If importers pass these additional costs on to consumers, household expenses will increase. Higher fuel import costs can also push up transportation and production expenses. Industries requiring imported raw materials and machinery may face increased operating costs, potentially raising the prices of manufactured goods. On the other hand, depreciation of the taka allows exporters to receive more local currency for each dollar earned. Families receiving remittances may also get more taka when converting foreign currency. However, higher costs for import-dependent industries and rising consumer prices could significantly offset these benefits.
A New Economic Challenge
Economists believe restoring stability in the dollar market requires balancing foreign currency earnings and expenditure. Attempts to hold the exchange rate at an artificially fixed level could prevent actual market demand and supply from being reflected. At the same time, excessive depreciation risks increasing import costs and inflation. They stress the need to strengthen efforts to channel remittances through formal banking systems and improve monitoring of export earnings repatriation. Caution over unnecessary and luxury imports, better fuel-import planning and coordination of foreign debt repayment schedules are also necessary. The dollar’s rise to Tk 129 in the open market serves as a fresh warning for Bangladesh’s foreign exchange market. The Tk 4.20 gap between open-market and banking-channel rates highlights growing disparities between the two segments. Increasing dollar supply, encouraging transactions through authorised channels and ensuring market transparency are essential to narrowing the gap. Otherwise, higher dollar prices could generate further pressure on everything from import costs to the everyday living expenses of ordinary citizens.
