B Mirror Report: The Bangladeshi taka has started to weaken against the US dollar after being comparatively stable for a number of months. This is because Bangladesh Bank (BB) has stopped interfering in the foreign exchange market due to worries about the potential economic effects of the ongoing US-Israel confrontation with Iran.

According to Bangladesh Bank data, the US dollar was traded at a maximum of Tk 122.55 yesterday, slightly higher than Tk 122.37 on the previous day.

The weighted average interbank exchange rate also rose to Tk 122.49 per dollar, compared to Tk 122.43 a day earlier. The rate was Tk 122.36 last Thursday and Tk 122.33 on Wednesday, indicating a gradual weakening of the local currency.

Central bank data shows that the taka has been losing ground against the greenback since March 2 this year.

Officials of the central bank said the regulator has temporarily stopped intervening in the currency market due to potential economic shocks stemming from the escalating tensions in the Middle East. As a result, the value of the taka has started to fall against the US dollar.

They also noted that international fuel prices have surged sharply, which could raise Bangladesh’s import costs and create volatility in the foreign exchange market in the coming days.

Considering the possible risks, Bangladesh Bank has also halted purchasing US dollars from the market, officials added.

Data from the central bank shows that Bangladesh Bank bought more than $5 billion from the forex market from the beginning of the current fiscal year until March 2.

However, between FY21 and FY25, the central bank sold more than $25 billion from its foreign exchange reserves to meet import payments for fuel, fertiliser and food.

Officials also said the new governor of Bangladesh Bank recently indicated that the central bank may provide US dollar support from forex reserves for fuel imports if necessary.

Due to Bangladesh Bank’s recent dollar purchases, the country’s foreign exchange reserves have increased, reaching $34 billion as of March 8, according to BB data. However, based on the IMF’s calculation method, the reserves stand at $29.38 billion.

Meanwhile, on Saturday, eight leading economists met the new governor of the central bank to discuss ways to mitigate the potential economic impact of the Middle East crisis.

The economists advised Bangladesh Bank to remain cautious in using the country’s foreign exchange reserves, warning that escalating tensions in the Middle East could trigger new economic shocks.

They also cautioned that rising global fuel prices could increase Bangladesh’s import bills and put further pressure on the country’s foreign exchange reserves.

The economists recommended that the central bank explore alternative financing sources for fuel imports instead of relying heavily on the reserves.