The rising price of the US dollar (USD) against the Bangladeshi Taka (BDT) has become a major economic concern in 2024-2025. Businesses, importers, and ordinary citizens are feeling the impact as the exchange rate crosses ৳120 per dollar in the open market, up from ৳84.8 in 2021.
But why is the dollar getting stronger in Bangladesh? This article explores the key reasons behind the dollar price hike, its economic consequences, and possible solutions to stabilize the exchange rate.
Current Dollar Rate in Bangladesh (2024-2025)
| Year | Official Rate (BDT per USD) | Kerb (Open Market) Rate |
|---|---|---|
| 2021 | ৳84.80 | ৳85-86 |
| 2023 | ৳108.50 | ৳112-115 |
| 2024 | ৳117.50 | ৳120-122 |
Source: Bangladesh Bank, Exchange Houses, and Money Changers
The widening gap between the official and kerb market rates indicates dollar shortages and increased demand in the informal market.
6 Major Reasons Why the Dollar Price Is Rising in Bangladesh
1. High Import Demand vs. Low Export Growth
- Bangladesh imports fuel, machinery, food, and raw materials worth $70 billion+ annually.
- Exports (mainly RMG) are growing at only 7%, failing to cover import costs.
- Trade deficit forces banks to buy more dollars, increasing demand.
2. Declining Remittance Inflows
- Remittances dropped to $21 billion in 2024 from $22 billion in 2023.
- Hundi (illegal money transfer) reduces dollar inflows through formal channels.
- Middle East economic slowdown reduces migrant workers’ earnings.
3. Foreign Exchange (Forex) Reserve Depletion
- Forex reserves fell from $48 billion (2021) to $26 billion (2024).
- Bangladesh Bank sold $7.5 billion in 2023 to stabilize the Taka.
- Lower reserves weaken confidence, leading to higher dollar demand.
4. Global Economic Factors
- Strong US Dollar Policy: The US Federal Reserve’s high interest rates (5.25%-5.50%) attract investors away from emerging markets.
- Ukraine-Russia War & Middle East Tensions disrupt supply chains, increasing commodity prices.
- China’s economic slowdown affects Bangladesh’s supply of raw materials.
5. Inflation & Currency Depreciation
- Bangladesh’s inflation (8.5% in 2024) reduces the Taka’s purchasing power.
- Importers & businesses hoard dollars, fearing further depreciation.
6. Policy & Structural Issues
- Multiple exchange rates (official vs. kerb market) create instability.
- Delayed IMF loan conditions slow down reforms.
- Lack of FDI diversification keeps dollar supply limited.
Effects of Dollar Price Hike on Bangladesh’s Economy
1. Increased Cost of Imports
- Fuel, food, and medicine become more expensive.
- Industrial production costs rise, reducing competitiveness.
2. Higher Inflation
- Imported inflation pushes food prices up by 9%+.
- Electricity & transport costs increase, hurting low-income families.
3. Pressure on Foreign Debt
- Dollar-denominated loans (World Bank, ADB, IMF) become costlier to repay.
- Sovereign credit rating risks increase, raising borrowing costs.
4. Business & Banking Crisis
- LC (Letter of Credit) openings drop due to dollar shortages.
- NPLs (bad loans) rise as businesses struggle with high costs.
5. Reduced Foreign Investment
- Investors fear currency instability, slowing FDI inflows.
- Stock market declines as dollar volatility scares off traders.
How Can Bangladesh Stabilize the Dollar Rate?
1. Boosting Exports & Diversifying Markets
- Expand beyond RMG (IT, pharmaceuticals, leather goods).
- New trade agreements with Africa & Latin America.
2. Encouraging Formal Remittances
- Strict action against Hundi.
- Higher incentives for remitters (3-4% cash bonus).
3. Increasing Forex Reserves
- IMF’s $4.7 billion loan program must be utilized effectively.
- Dollar bonds for expatriates to attract foreign currency.
4. Tightening Monetary Policy
- Higher interest rates to curb inflation and stabilize the Taka.
- Restricting luxury imports (cars, electronics) to save dollars.
5. Reducing Dependence on Imports
- Local fuel & food production (offshore gas, agricultural tech).
- Renewable energy (solar, wind) to cut fuel imports.
6. Single Exchange Rate System
- Unify official & kerb market rates to reduce speculation.
- Allow market-driven currency adjustments.
Future Outlook: Will the Dollar Rate Decrease?
Optimistic Scenario (2025-2026)
✅ Remittances recover to $23 billion+
✅ Exports grow by 10%+
✅ Forex reserves stabilize at $30 billion
→ Dollar rate could fall to ৳110-115
Pessimistic Scenario (If Reforms Fail)
❌ Imports remain high, reserves drop below $20 billion
❌ Inflation stays above 8%
❌ Political instability slows reforms
→ Dollar may cross ৳130-135
Conclusion
The rising dollar price in Bangladesh is driven by trade deficits, falling remittances, depleting forex reserves, and global economic pressures. Without urgent reforms, the Taka could weaken further, increasing inflation and business costs.
Key solutions include:
✔ Export diversification
✔ Higher remittance incentives
✔ Stricter control on Hundi
✔ Market-based exchange rates
If Bangladesh implements these measures, the dollar rate could stabilize, ensuring long-term economic stability.
FAQs on Dollar Price Increase in Bangladesh
Q1: Why is the dollar rate increasing in Bangladesh?
A: Due to high import demand, low remittances, falling forex reserves, and global dollar strength.
Q2: What is the current dollar rate in Bangladesh?
A: ৳117.50 (official) & ৳120-122 (kerb market) as of 2024.
Q3: How does the dollar price hike affect common people?
A: It increases food, fuel, and medicine prices, reducing purchasing power.
Q4: Will the dollar rate decrease soon?
A: Only if exports, remittances, and forex reserves improve. Otherwise, it may keep rising.
Q5: What is the government doing to control the dollar price?
A: Import restrictions, remittance incentives, and IMF loan negotiations are ongoing steps.