Bangladesh Taka Exchange Rate Drops Below Tk 123 as Dollar Demand Ebbs

Dhaka, August 16, 2026 — Bangladesh's currency gained some strength as the taka-dollar exchange rate dropped significantly amid lower demand for the American greenback — giving some coveted relief to importers, officials and bankers said. Riding on higher remittance inflows and improved export receipts, the exchange rate dropped by more than Tk 1.0 in recent weeks, with banks now buying dollars from remitters at Tk 122.50-122.60 per dollar — down from Tk 123.60-123.70 a few weeks earlier.

💵 The Exchange Rate Movement

The taka's recent appreciation reflects improved dollar supply dynamics:

• 📉 Tk 122.50-122.60 — current bank buying rate from remitters
• 📈 Tk 123.60-123.70 — rate a couple of weeks earlier
• 📉 Tk 122.89 — BB spot reference rate (August 12, 2026)
• 📈 Tk 123.81 — BB spot reference rate (July 27, 2026)
• 📉 Tk 126 — kerb market rate (down from Tk 127 a week ago)
• 📉 More than Tk 1.0 drop — overall exchange rate decline

📊 Why the Dollar Rate Is Falling

A Bangladesh Bank official, speaking on condition of anonymity, said the exchange rate dropped significantly in recent days mainly because of much higher supply than demand:

• 💰 Higher remittance inflows — remitters sent home significant foreign currency
• 📈 Export receipts on upturn — export earnings improving
• 📉 Government import settlement completed — demand plummeted after government payments
• 💰 BB halted dollar purchases — central bank stopped market intervention
• 📈 Net Open Position (NOP) over $1 billion — banks have more than enough dollar stock

“Because of the supply-side boost, majority of the banks are in a long position in terms of forex holdings, which means the banks have more than enough stock of dollars than their demands,” the BB official said.

🏢 Banking Sector Perspective

The treasury head of a commercial bank, speaking on condition of anonymity, said there was no big pressure of demand as most of the government import liabilities have already been settled:

“So, banks are not interested to buy remittance at higher rate from exchange houses. This is the reason behind the continuous fall in exchange rate.”

The banking sector dynamics include:

• 💰 NOP over $1 billion — banks hold excess dollar positions
• 📉 No big import pressure — government import settlements completed
• 📈 Banks not competing for dollars — reduced demand drives price down
• 📜 BB intervention halted — central bank stopped dollar purchases
• 📈 Remittance supply strong — expatriate inflows continue to boost supply

🚧 Cash Margin Withdrawal on Fruit Imports

As a spillover effect of the forex stability, the BB also withdrew the mandatory 100 percent cash margin requirement for fruit imports, citing improved stability on the foreign-exchange market and in reserves:

• 🍎 100% cash margin withdrawn — for fruit import LCs
• 👥 Banker-customer relationship-based margin — new determination method
• 📅 September 2024 — original imposition amid forex crisis
• 🚧 Luxury goods excluded — 100% cash margin remains for non-essential imports

📊 Forex Reserves Context

The exchange rate improvement comes amid continued forex reserves recovery:

• 💰 ~$37 billion — BB count (gross reserves)
• 💰 ~$32 billion — IMF BPM6 methodology
• 📈 $37.11 billion — latest gross reserves figure (August 13, 2026)
• 💰 $1.5 billion — remittances in first 12 days of August 2026

🌐 Strategic Context: Exchange Rate and Export Competitiveness

For Bangladesh's export economy, the taka's appreciation has mixed implications:

• 📉 Import cost relief — stronger taka reduces cost of imported raw materials
• 📈 Export margin pressure — exporters receive fewer taka per dollar of exports
• 💰 Debt service relief — external debt servicing costs less in taka terms
• 🚧 Remittance rate risk — if rate drops too low, remitters may reduce flows
• 💵 BB floor target — central bank may intervene if rate falls below Tk 122.20

The BB faces a delicate balancing act: allowing the taka to appreciate reduces import costs and builds reserves, but if the rate drops too far, it could discourage remittance inflows (Bangladesh's largest foreign exchange source) and erode export competitiveness. The BB's earlier indication that it does not want the dollar rate to fall below Tk 122.20 suggests that the current Tk 122.50-122.60 range may represent the floor of the acceptable exchange rate corridor.

For Bangladesh's RMG exporters — who have been hit by a 16.43 percent decline in EU exports in H1 2026 — the taka appreciation adds another margin pressure layer. However, the accompanying reduction in import costs for raw materials (cotton, fabric, machinery) may partially offset the revenue impact, maintaining overall export profitability while improving the country's external balance position. The BB's challenge is to manage the exchange rate at a level that supports both import cost reduction and export competitiveness — while ensuring remittance inflows remain attractive enough to sustain the $35+ billion annual flow that underpins the country's forex stability. The coming weeks will reveal whether the Tk 122.50-122.60 rate represents a stable equilibrium or merely a temporary pause in the taka's longer-term depreciation trajectory.