Currency exchange balancing act

Bangladesh's foreign exchange reserves are declining. Taka's depreciation makes imports more expensive, necessitating the central bank (BB) to sell its US dollars (USD) to meet demands. This diminishes forex reserve, which is crucial for economic stability.

To manage the situation, BB attempts to influence the exchange rate by adjusting USD supply and demand. They have also utilised currency swaps to temporarily boost reserves. However, these are temporary solutions.

The key to long-term stability lies in boosting exports, attracting remittances from Bangladeshis working abroad, and diversifying sources for imports to reduce reliance on USD. These strategies will generate more foreign currency, replenishing reserves and making Bangladesh more resilient to currency fluctuations.

Shadman Shabbir, Student

North South University

[email protected]