Bangladesh is grappling with a dollar shortage, primarily due to increased demand from state-owned banks to settle overdue import payments. This has led to a surge in the remittance dollar rate by nearly Tk2, as banks compete for foreign currency. The central bank’s decision to halt dollar sales from reserves has further exacerbated the situation.
Despite a recent decline in overdue payments, the pressure remains, particularly for fuel oil and electricity imports. State-owned banks are aggressively acquiring dollars from the remittance market, offering higher rates to attract funds. This has narrowed the gap between formal and informal remittance channels. While overall remittance inflow has increased, it’s concentrated in state-owned banks. Commercial banks are reducing their dollar holdings due to changing interest rate dynamics and increased domestic demand. The declining foreign exchange reserves highlight the country’s dollar shortage and its potential impact on economic stability.
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