War puts forex market under strain: BB

Bangladesh’s foreign exchange market came under mild pressure in March as heightened global uncertainty stemming from the Middle East war situation pushed up exchange-rate volatility and interbank dollar transactions, according to a monthly report by the central bank.

The interbank exchange rate rose to Tk 122.75 per dollar at the end of March from Tk 122.30 per dollar at the end of February 2026, reflecting marginal depreciation.

However, on a year-on-year basis, the movement in the exchange rate resulted in a nominal depreciation of 0.61 percent against the US dollar, said the report on exchange rate and foreign exchange market dynamics.

The variability in the exchange rate increased considerably, and rates moved within a wider range in March 2026 after a period of low variability since December 2025, according to the report published yesterday.

The Bangladesh Bank report said that while the spread in the interbank market and in the bank’s sales to clients remained stable, the spread in the bank’s purchase from the client market edged up on average to Tk 1.19 per US dollar in March from Tk 0.99 per dollar in February.

The global economic uncertainty stemming from the Middle East was propagated through the foreign exchange market, as reflected in the daily average spread of spot exchange rates, defined as the daily maximum minus minimum rate, said the report.

At the same time, the volume of daily average spot transactions rose to $62.17 million in March from $37.27 million in February as banks increased dollar trading amid growing global economic uncertainty.

“An increase in exchange rate flexibility and a rise in liquidity in the foreign exchange market led to a rise in interbank spot foreign exchange transaction volume on average in March 2026, with some fluctuation in daily transactions,” said the report.

At the same time, the volume of swap transactions edged up markedly during the period. The average daily swap transaction doubled to $100.82 million in March from $53.54 million in February.

As such, the share of swap transactions in total interbank transactions rose to 62 percent in March from 59 percent in February. By contrast, the share of spot transactions declined.

The Bangladesh Bank said swap transactions increased at a faster rate than spot transactions amid growing war-driven uncertainties.

The report said that since the foreign exchange market has experienced gentle pressure, the central bank reduced the pace of its foreign exchange purchases in March to only $25 million, far lower than $1.53 billion in February, “as a part of cautious and prudent market management.”