Interbank dollar trade surges nine times in June

Average daily interbank spot transactions rose to $68.7 million in June, registering a ninefold increase from $7.5 million in March and April this year, following increased market-driven exchange rate movements and improved liquidity.

In a report released yesterday, the Bangladesh Bank (BB) said that the volume of interbank spot transactions had been on the rise since mid-May.

The central bank in May said it would allow the exchange rate of foreign currencies to be determined by market forces, moving away from the crawling peg.

The BB last year introduced the crawling peg, which allowed the exchange rate to move in a certain band, before reintroducing the market-based exchange rate.

"This shows that forex transactions are taking place based on the market rate. Transactions increase when buyers and sellers can take part in the market freely," said Md Shaheen Iqbal, deputy managing director and head of Treasury & Financial Institutions at BRAC Bank.

"And price discovery becomes easy when transactions take place based on market demand and supply, and prices become transparent. Otherwise, it becomes costly for all," he added.

The volume of total spot transactions picked up to $155 million and $184 million on the second and fourth of June 2025, respectively, before a 10-day-long public holiday for Eid-ul-Azha and weekends, said the report titled "Exchange Rate & Foreign Exchange Market Dynamics".

Iqbal said the increased availability of foreign exchange, due to higher inflows of remittances and exports, contributed to the spike in spot transactions.

The BB said the interbank exchange rate of the US dollar, after staying stable at Tk 122 for a long time, had been depreciating since mid-May 2025 in an orderly fashion.

However, exchange rates witnessed some appreciation pressure in the recent period at the end of June 2025 amid a favourable development in the Balance of Payments (BoP), which is a summary of a country's transactions with the rest of the world, on the back of strong external inflows against weak import demand.

The BB said the volume of daily spot US dollar transactions in June 2025 ranged from $23.5 million to $184.3 million, and transactions were highly concentrated in US dollars.

However, non-USD spot transactions, mostly euros, dominated the spot market transactions in March and April 2025, partly because of inflexibility in the Bangladesh Taka and US dollar exchange rate.

The BB said its intervention in the market reversed to a net purchase in March–May 2025 after a persistent net selling amid stress on the external balance.

"To foster effective functioning of the interbank market, BB has gradually phased out undue intervention (both selling and purchasing of foreign currency) in the foreign exchange market," the report said, adding that the central bank has not intervened in the foreign exchange market since 15 May 2025.