When the dollar becomes the silent decision-maker
In Bangladesh, traders obsess over shipment delays, LC bottlenecks, port congestion, trucking costs, and customs duty changes. But beneath all these lies a silent and far more dangerous force: the exchange rate.
Every importer, exporter, and manufacturer lives under an unspoken truth:
The price of the dollar can decide who survives the year.
From 2022 onward, Bangladesh entered its most volatile foreign-exchange cycle in more than a decade. The taka swung sharply first depreciating, then stabilizing, then becoming artificially overvalued, then widening dollar gaps again. Throughout this roller-coaster, one thing became clear:
Most Bangladeshi traders were never prepared for FX risk.
Many had no hedging strategy, no contingency pricing, and no dollar-linked cost modelling. And as the swings intensified, the shocks punished businesses from every sector apparel, electronics, consumer goods, textile accessories, automobiles, raw materials, and industrial capital good.
This article explores the real-world impact of the taka-dollar crisis, backed by the latest trade data, current examples from 2024-2025, and case stories from Bangladesh’s trading community.
SECTION 1: The Current Trade & FX Landscape in Bangladesh
1.1 Import-Export Reality: A Persistent Gap
Bangladesh is fundamentally an import-driven economy. Even as exports grow, the appetite for foreign currency remains significantly larger.
Recent trade data:
- July 2024 – May 2025 (FY25):
- Imports: USD 60.25 billion
- Exports: USD 40.87 billion
- Trade deficit: ~USD 20 billion
- July – August 2025 (FY26 first two months):
- Imports: USD 10.89 billion
- Exports: USD 7.93 billion
- Deficit in two months alone: ~USD 3 billion
This early-year deficit widening signals that the pressure on USD demand remains structurally high.
1.2 A Reserve Position That Looks Stable Until You Look Closer
Throughout 2024-2025, Bangladesh’s forex reserves moved up and down:
- Early 2025: Gross reserves around USD 26.15 B
- April 2025: BPM6 (conservative method) reserves USD 22.04 B
- December 2025: Gross reserves improved to USD 27.22 B
Although this appears stable, economists warn:
- Imports still require USD 6-7 billion per month
- Reserves cover only about 4 months of import demand
- External debt repayments keep rising
- Export earnings are slowing due to global demand uncertainty
So, while the numbers look comfortable, the structural stress remains high.
SECTION 2: The Taka Roller-Coaster And Why It’s Dangerous
2.1 The Great Depreciation (2022-2024)
The dollar shortage started in mid-2022:
- Taka fell 13.3% in 2022 alone
- Exchange rate jumped from BDT 85 → 120+ per USD by 2024
- Raw-material costs soared for all import-linked industries
- Freight, fuel, energy, and packaging costs followed
Impact on traders:
- Importers could not price forward
- Exporters struggled to honour long-term contracts
- LCs required higher cash margins
- SME manufacturers faced shutdown due to cost spikes
- Inflation hit consumers hard, reducing demand
The real pain was simple: nobody knew what tomorrow’s dollar rate would be.
2.2 The Overvaluation Phase (2024-2025)
Ironically, after the depreciation came another issue:
the taka became artificially stronger.
- In early 2025, Real Effective Exchange Rate (REER) showed taka overvalued by Tk 2.27
- By late 2025, overvaluation widened to Tk 5.48
- Exporters lost price competitiveness
- Importers faced unpredictable LC approval delays because banks lacked dollars despite a “strong” exchange rate
Economists warned this was the worst of both worlds:
- Currency too strong → exports decline
- Dollars still short → importers cannot access funds
- Official rate unrealistic → banks create “informal premiums”
The result: a dual-rate ecosystem where official numbers say one thing, but real transactions tell another story.
SECTION 3: Ground Reality How Traders Really Got Hit
This is the part rarely covered in newspapers. Here are real-life Bangladesh cases, anonymized but based on actual trading scenarios from 2023-2025.
Case Study 1: The Garment Accessories Maker Who Lost His Entire Order Cycle
Location: Gazipur
Business: Zipper and thread importer, supplying export factories
Dollar impact: Raw material cost doubled from 2022 to 2024
He imported zipper rolls at USD 6 per pack.
At 85 taka per dollar → BDT 510
At 118 taka per dollar → BDT 708
At 122 taka per dollar → BDT 732
His buyers (RMG exporters) refused price increases.
Banks delayed LCs.
Buyers in Europe postponed shipments.
Outcome:
He reduced factory capacity from 3 production lines to 1, and laid off 40 workers.
Case Study 2: The Steel Importer Who Couldn’t Lift Material Despite Having Money
Location: Chittagong
Product: Cold rolled coils (CRC)
Scenario: Sent LC request at USD 500/MT
Bank told him:
“We can open the LC, but we cannot confirm dollar availability until vessel arrives.”
He hesitated.
By the time he re-confirmed, global steel prices rose.
He lost Tk 1.4 crore in potential profit due to delay.
Case Study 3: The Electronics Distributor Who Lost Retail Demand Overnight
Location: Dhaka
Product: LED TVs, small home appliances
Issue: Price volatility killed demand
When the USD jumped from 105 → 118, his landed cost rose 15-18%.
He increased retail price accordingly.
But consumers, already facing inflation, stopped buying.
Outcome:
Sales dropped 45%.
Unsold inventory piled up.
Banks refused to increase working-capital limits because of FX exposure.
Case Study 4: The Freight Forwarder Struggling to Quote Clients
Location: Uttara
Business: Import-export freight and customs brokerage
Problem: The dollar rate changed between quotation → LC → payment
He quoted freight at:
USD 2,800 per container ← when rate was Tk 110
But by the time LC settled, rate became Tk 118
Total effect:
Importers blamed him for “overcharging” even though the real issue was FX.
His margins shrank because he had to absorb rate movement to keep clients.
Case Study 5: The Small Plastic Manufacturer Who Shut Down
Location: Narayanganj
Raw material: PP and PE granules
Impact:
- Dollar shortage → cannot open LC
- Suppliers asked for 100% TT advance
- Taka depreciation → raw materials became unaffordable
- Electricity and gas price hikes added pressure
Result:
He closed his factory after 17 years.
Shifted to trading importing small lots by paying via agents, at a higher cost, but lower risk.
SECTION 4: The Banking Side The Invisible Gatekeeper
Most traders blame “dollar rate” but underestimate the banking bottleneck.
What really happened in banks (2023-2025):
- 100% cash margin required for many LCs
- Banks informally rationed dollar allocations
- Some banks quoted one rate, executed at another
- Import approvals delayed for weeks
- Exporters received partial realization because banks prioritized essential sectors
- Fuel, fertilizer, medicine was given first priority; SMEs were pushed last
This meant:
- Business planning became impossible
- Importers lost global supplier credibility
- Contracts were cancelled
- Shipment delays turned into penalties
Banks ultimately controlled the speed and stability of trade.
SECTION 5: Why FX Risk Was Never Taken Seriously in Bangladesh
Bangladesh’s trading culture historically has been informal. Many SMEs never built financial buffers or risk-management systems.
Traders usually follow this philosophy:
- “Price ekbar bole dilam ei rate-e business hobe”
Translation: Price is Fixed one time. No increase on later stage.
- “Dollar rate badhle amra adjust korbo somehow”
Translation: We will manage somehow, even if the price increase.
- “Supplier ekhon LC accept korse rate koto holo dekha jabe”
Translation: Let supplier accept the LC first, we will see later on about the rate.
But in a volatile FX environment, these attitudes collapse.
Three major weaknesses:
- No hedging mechanisms
Forward contracts, currency futures, swap-based hedges none of these are commonly used.
- Misconception about LC
Most traders think:
“LC thakle amader dollar confirm.”
But in reality, LC confirmation does not guarantee dollar availability.
- No dynamic pricing
Global companies adjust pricing weekly.
Bangladeshi traders often update pricing quarterly or bi-annually extremely risky during FX turbulence.
SECTION 6: The Human Side Stress, Debt, and Business Survival
FX volatility doesn’t just affect P&L. It affects people’s lives.
Impact on SME Traders:
- Many borrowed from informal lenders at 2-3% monthly interest
- Families scaled down lifestyle to support cash flow
- Staff salaries delayed
- Business owners suffered depression/anxiety
- Supplier relationships weakened
- Years of goodwill evaporated
- Importers feared legal cases for LC default
- Exporters couldn’t pay back-to-back buyers’ credit
It became a national mental-pressure crisis for the trading community.
SECTION 7: The 2025-26 Outlook What Traders Should Expect
Given global conditions and internal structural pressures, the following themes will continue:
- Dollar supply remains tight
Imports will grow faster than exports.
- Dual-rate market persists
Official rate vs. bank quotes vs. informal/market rate.
- LC restrictions won’t disappear soon
Banks will remain selective.
- Overvaluation may reverse suddenly
If BB stops intervention, taka could weaken again.
- Export competitiveness stays under pressure
Particularly for RMG and frozen foods.
SECTION 8: What Bangladeshi Traders Must Do Immediately
To survive the next 12-18 months:
- Switch to weekly-based pricing for USD-linked products
No more long-term fixed rates.
- Maintain a dollar buffer (even small amounts)
Especially for frequent importers.
- Strengthen relationships with banks
Treat RM and branch managers as strategic partners.
- Consider partial hedging
Even informal hedging (stocking USD when rate dips slightly) helps.
- Negotiate with suppliers for flexible payment terms
Shift from full TT to partial advance + final payment.
- Build demand forecasting models
Especially for seasonal industries.
The FX Risk No One Prepared For
Currency volatility is now the new normal for Bangladesh.
The taka may strengthen, weaken, stabilize, or swing but the underlying structural gaps will remain for years:
- Declining export competitiveness
- Rising import dependence
- Heavy debt servicing
- Weak LC confidence
- Tight banking liquidity
For traders, the biggest mistake is pretending the old world still exists the world where LC guarantees existed, the dollar barely moved, and planning could be done yearly.
The FX crisis has taught one thing:
Bangladesh’s traders must evolve or be wiped out by the next currency shock. Alza Bitmarea
Reference
- Bangladesh Bank (2022) Financial Stability Report 2022. Dhaka: Bangladesh Bank.
- Bangladesh Bank (2024) Monthly Economic Trends. Dhaka: Bangladesh Bank.
- Bangladesh Bank (2025) Foreign Exchange Reserve Position. Dhaka: Bangladesh Bank.
- Daily Sun (2025) ‘Capital machinery imports remain depressed amid dollar crisis’, Daily Sun, December.
- The Business Standard (2025) ‘Bangladesh’s forex reserves rise under BPM6 method’, The Business Standard, April.
- The Business Standard (2025) ‘Import LC settlements fall amid economic slowdown’, The Business Standard, November.
- The Financial Express (2025) ‘Taka stays overvalued, undercuts trade competitiveness’, The Financial Express, February.
- The Financial Express (2025) ‘Dollar gap widens as taka remains overvalued’, The Financial Express, September.
- Xinhua News Agency (2025) ‘Bangladesh trade deficit narrows but import pressure persists’, Xinhua, July.
- Arif, A. & Rahman, M. (2025) ‘Macro-financial stability assessment of Bangladesh’, Working Paper, July.
