MD MEHEDI HASAN

Local currency taka has started to gain strength against the US dollar for the first time in several years, as a steady inflow of foreign currency drives down the official exchange rate.

Over the past five days, the inter-bank rate for selling dollars has fallen by Tk 2.20. As of Monday, it stood at Tk 120.1, down from Tk 122.3 on July 9, according to the Bangladesh Bank (BB).

The buying rate at the inter-bank level was Tk 119.5 per dollar.

This is completely the opposite of the weakening trend that began in 2022. Following the economic shocks of the Covid-19 pandemic, the taka depreciated by roughly 30 percent as instability hit both the global and domestic markets.

Industry insiders point to several reasons behind the currency’s recent recovery.

These include a rise in remittance flows after the political changeover last year, a drop in illegal cross-border transactions and money laundering, and fresh fund disbursements by multilateral lenders.

Remittances in the recently concluded fiscal year (FY) 2024-25 reached a record $30.32 billion, up by 26.81 percent or $6.4 billion year-on-year, according to BB data.

In May this year, the central bank moved towards a more flexible exchange rate regime, one of the conditions tied to the ongoing $4.7 billion loan package from the International Monetary Fund (IMF).

Although there were initial concerns that this would lead to further depreciation of the taka, it has shown the opposite effect so far.