Dollar rises to Tk123 amid import payment pressure, softer remittance inflows

The exchange rate of the US dollar has climbed back to Tk123, with several private banks purchasing dollars from exchange houses at rates ranging between Tk122.90 and Tk123 today (10 June).

Bankers attributed the increase to growing demand for dollars to open letters of credit (LCs) for key imports, including petroleum, fertiliser and fuel, coupled with relatively weaker remittance inflows at the start of the month.

The Business Standard confirmed this after speaking with several private bank officials.

According to the officials, pressure on the foreign exchange market intensified as importers sought to settle payments for essential commodities, pushing up demand for dollars.

The Bangladesh Bank data shows expatriates remitted around $980 million during the first eight days of June, lower than the more than $1.5 billion received during the same period in March and over $1 billion during the first nine days of May.

In April, remittance inflows stood at $975 million during the first eight days.

A senior private bank official told TBS remittance inflows typically decline after Eid holidays, creating temporary pressure when demand for dollars exceeds supply.

"Supply is slightly lower than demand at the moment, which has pushed up the exchange rate at the beginning of the month," the banker said, adding that the pressure may ease after mid-June.

The dollar last crossed the Tk123 mark in April, when Bangladesh Bank reportedly asked banks to buy dollars at Tk122.75 before gradually bringing the rate down.

Economists, however, said the central bank should allow the exchange rate to be determined by market forces rather than relying on informal interventions.

They argued that current market conditions do not warrant administrative measures to contain the dollar rate and that a demand-and-supply-based exchange rate would better reflect underlying economic fundamentals.