Forward-Booking Importers Get Tk 1 Edge Per Dollar as Exchange Rate Jumps

ASM Saad, Dhaka — Importers that booked dollars forward over the past two weeks are gaining as much as Tk 1 per dollar after the exchange rate rebounded to Tk 123.50 from Tk 122 within days — providing a meaningful commercial advantage to businesses that hedged their future dollar payments.

The dollar exchange rate rose to Tk 123.50 on Thursday from Tk 122 ten days earlier, giving businesses that hedged their future payments an advantage, according to treasury officials at several commercial banks. The Tk 1.50 movement in 10 days represents a significant exchange rate volatility that has rewarded forward-booking importers.

💰 Forward Booking Mechanics

Large commodity and fast-moving consumer goods (FMCG) importers typically use forward contracts to lock in exchange rates when they expect the dollar to become more expensive. Some private power producers also used to hedge their dollar exposure, but bankers said they are no longer doing so.

"Forward booking is an internationally practised mechanism. When importers believe the dollar rate is volatile or may rise, they opt for forward booking," said Tareq Refat Ullah Khan, Managing Director of BRAC Bank.

An importer benefits from a forward contract if the dollar rate at the time of payment is higher than the contracted rate. However, if the dollar becomes cheaper, the importer still has to settle the payment at the agreed forward rate — a two-sided risk that requires careful market judgement.

💰 Recent Forward Booking Examples

Several senior executives of business groups said they had booked dollars in the last two weeks for import LC payments due in about a month. Examples include:

• 💰 FMCG importer: hedged $20 million for 30 days in August at Tk 122.60 per dollar
• 💰 Industrial company: booked at Tk 122 with Tk 0.20 forward premium for 30 days — effective rate Tk 122.60
• 💰 Another industrial company: booked at Tk 122.20 for 30 days — effective cost Tk 122.80 per dollar

Importers that booked at the beginning of last week could settle their payments at below Tk 123 per dollar, compared with more than Tk 124 a month earlier — representing a meaningful commercial advantage of Tk 1+ per dollar for forward-booking businesses.

💰 Cost of Locking in Dollars

A senior executive of an industrial company said he booked in the last two weeks when the exchange rate fell to Tk 122 for a payment due in a month. With a forward premium of Tk 0.20 per dollar for 30 days, the effective rate is Tk 122.60. The company will settle the payment at that rate even if the dollar rises further, but it will also have to pay the same rate if the dollar falls.

Demand for forward bookings increased at several banks in the last two weeks as the dollar had been falling steadily in recent months, the official said — reflecting growing importer awareness of forward booking as a hedging tool.

🏛 Bank Selection of Importers

Khan said banks are currently accepting forward-booking requests mainly from importers with:

• 👥 Strong track records — proven payment history
• 👥 Long-standing relationships with commercial banks
• 👥 Established credit lines — sufficient collateral coverage
• 👥 Import LC history — documented trade finance track record

"Excessive forward booking can create pressure in the dollar market. But it is an international practice and importers have the right to use it. The problem is that many banks are currently unable to offer the facility," Khan said — highlighting that the forward booking market remains constrained by bank capacity and risk appetite.

👥 Arfan Ali's Endorsement

Arfan Ali, former Managing Director of Bank Asia, said forward booking gives businesses greater confidence and should be allowed to operate properly to ensure a well-functioning market. "Businesses need the confidence that comes from the availability of forward booking," he said — underscoring the strategic role of forward markets in reducing exchange rate uncertainty for importers.

🏛 Bangladesh Bank's Market Absence

The recent movement in the exchange rate has also been influenced by Bangladesh Bank's absence from the spot dollar market, bankers said. Key observations:

• 💰 BB latest dollar purchase: reportedly at Tk 122.80
• 💰 BB intervention expectation: bankers assumed central bank would intervene around Tk 122.80 level
• 💰 BB did not buy dollars from commercial banks last week
• 💰 Bank net open positions: many banks still have high net open positions (more foreign currency than needed)
• 💰 Bank reluctance to sell: banks reluctant to sell dollars at lower rates (would realise losses on existing holdings)

A senior private bank official said the dollar might not have fallen to Tk 122 had the central bank intervened by purchasing dollars when the rate began to decline. The BB's market absence has allowed the exchange rate to find its own equilibrium — but has also contributed to the recent Tk 1.50 reversal.

📊 Government Payment Influence

Changes in government payment obligations are also affecting the foreign exchange market:

• 💰 Remittance exchange rate movement: fell by ~Tk 1, from Tk 123.60 to Tk 122.60, within a week before slipping further to Tk 122
• 💰 Government payments due this month: more than $1 billion
• 💰 Already settled last week: roughly $500 million
• 💰 Last month's government payments: around $2 billion — put significant pressure on FX market and contributed to dollar rate rise

A senior private bank official said demand for forward bookings could increase further if businesses expect continued dollar rate volatility. Government dollar payments create periodic demand surges that importers can hedge against through forward booking.

🌏 Strategic Context: Taka Volatility

The Tk 122 to Tk 123.50 dollar rate movement comes amid broader exchange rate dynamics:

• 📊 REER at 103.93: Bangladesh Taka overvalued (separate FE report)
• 📊 July 2026 nominal rate: Tk 123.98 per USD
• 📊 Mid-August rate: Tk 122 per USD (low)
• 📊 End-August rate: Tk 123.50 per USD (rebound)
• 📊 FX reserves: $32.90 billion (BPM6) at end-FY26

The recent volatility reflects the broader transition in Bangladesh's exchange rate regime — with the central bank reducing direct intervention and allowing market forces to play a greater role in rate determination. The Tk 1.50 movement in 10 days, while notable, is consistent with the kind of volatility that forward booking markets are designed to help importers manage.

🌏 Strategic Implications

The forward booking advantage and dollar rate volatility carry several strategic implications:

• ✅ Forward booking value: Tk 1+ per dollar advantage for hedging importers
• ✅ Market-based exchange rate: BB absence allows rate to find natural level
• ✅ Importer risk management: forward contracts reduce FX uncertainty
• ✅ Bank capacity constraint: limited banks offer forward booking
• ⚠️ Two-sided risk: importers lose if dollar falls below contracted rate
• ⚠️ Bank net open positions: excessive dollar holdings constrain selling
• ⚠️ Government payment timing: large monthly payments create periodic demand
• ⚠️ BB intervention uncertainty: market unsure of central bank's intervention level

The Tk 1 per dollar forward booking advantage demonstrates the growing sophistication of Bangladesh's foreign exchange market — with importers increasingly using hedging instruments to manage exchange rate risk. As the market continues to liberalise and Bangladesh Bank reduces direct intervention, forward booking is likely to become an increasingly important risk management tool for Bangladeshi importers navigating the LDC graduation transition period. The development of a deeper, more liquid forward market would also support broader financial market development in Bangladesh through the post-graduation period beginning November 2026.