Bangladesh may feel demand-driven volatility on forex market

By the Editorial Team · Saturday, October 24, 2026

Bangladesh’s rising import costs, driven by higher global fuel and fertiliser prices, have widened its trade deficit and increased demand for US dollars, putting pressure on the foreign exchange market. The central bank may intervene to stabilize the currency, but continued price volatility could raise import costs further and spur inflation.

Bangladesh is facing potential volatility in its foreign exchange market driven by rising global prices for fuel and fertiliser, which have increased the country’s import costs and demand for US dollars, according to financial experts and central bank officials. The pressure stems from a widening gap between import payments and export earnings, increasing reliance on worker remittances to stabilize external accounts.

Data from Bangladesh Bank indicate that merchandise import payments rose 12.1% year-on-year to $12.20 billion during July–August of the current fiscal year, while export earnings grew by a more modest 5.8% to $8.38 billion. This disparity expanded the trade deficit to $3.82 billion, up from $2.96 billion in the same period last year. In contrast, remittances from overseas workers surged 18.9% to $5.83 billion, providing a crucial source of foreign currency to help meet import and external payment obligations.

A senior central bank official noted that the surge in global energy and fertiliser prices, exacerbated by ongoing tensions in the Middle East, could further intensify pressure on the foreign exchange market if those price trends persist or worsen. Bangladesh is heavily dependent on imported petroleum products, liquefied natural gas, and chemical fertilisers, making its import bill highly sensitive to fluctuations in international commodity prices, shipping costs, and geopolitical developments.

The central bank official, speaking on condition of anonymity, explained that increased pressures on the current account often translate to volatility in the foreign exchange market. To mitigate such fluctuations, the authorities may intervene by selling dollars to stabilize the market. However, such volatility could ripple through the economy by raising costs for imported commodities, potentially amplifying inflationary pressures.

Petroleum-related imports, a key driver of the import bill increase, more than doubled over the year, reaching $2.49 billion in July–August 2026 compared to $1.25 billion in the previous year’s corresponding period. The growth in dollar value outpaced any rise in the physical volume of imports, underscoring how higher global prices alone can significantly affect Bangladesh’s external payments.

As Bangladesh navigates this challenging economic environment, experts underscore the need for continued monitoring of international price developments to manage potential risks to the country’s foreign exchange stability and broader economic outlook.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.