As the US dollar hovered near six-week lows in global markets amid rising expectations of a potential Iran peace deal, the Bangladesh Bank stepped in to stabilise the local currency, purchasing a substantial $5.615 billion from commercial banks in a renewed market intervention.
The central bank resumed dollar purchases after a hiatus of around six weeks, buying the greenback from five banks at Tk 122.75 on Wednesday and Thursday, according to officials.
The move is aimed at preventing excessive volatility in the exchange rate, supporting export competitiveness and strengthening liquidity buffers within the banking system.
The dollar, which had remained stable at around Tk 122.30 for nearly 18 months, edged up to Tk 122.75 in mid-March.
Earlier interventions by Bangladesh Bank injected over Tk 67,000 crore into the market against the purchase of $5.49 billion, significantly easing liquidity conditions in the banking sector.
The latest move comes against the backdrop of a weakening global dollar. The greenback slipped to its lowest levels in over a month on Thursday as investor sentiment improved on signs of de-escalation in the Iran conflict.
Optimism grew after Donald Trump indicated that the US-Israeli confrontation with Iran was "close to over," while the White House signalled the likelihood of further diplomatic engagement.
Market confidence was further buoyed by reports suggesting that Tehran may allow safe passage of ships through the Strait of Hormuz if a deal is reached-easing concerns over global oil supply disruptions.
Reflecting the shift in sentiment, the euro climbed to $1.1808 while sterling strengthened to $1.3569, both hovering near their highest levels since February. The dollar index, which tracks the US currency against six major peers, steadied at 98.027 after falling for eight consecutive sessions-erasing most of the gains triggered by earlier geopolitical tensions.
Analysts say markets are increasingly pricing in a resolution to the conflict. "Investors are looking past the war and anticipating some form of settlement, which is removing the safe-haven premium from the dollar," said Khoon Goh, Head of Asia Research at ANZ.
He noted that a sustained break below the 98 level in the dollar index could trigger further downside, extending a broader weakening trend that has been in place since last year. The index is already down 0.7 per cent for the week, marking its second consecutive weekly decline.
Risk-sensitive currencies also gained ground, with the Australian and New Zealand dollars touching one-month highs, reflecting improved investor appetite for higher-yielding assets.
Meanwhile, the Japanese yen strengthened modestly after Tokyo signalled closer coordination with Washington on exchange rate stability, while China's offshore yuan edged higher ahead of key economic data releases.
Against this evolving global backdrop, Bangladesh Bank's intervention underscores a delicate balancing act-shielding the domestic currency from excessive swings while capitalising on a softer dollar to bolster reserves and sustain external sector stability.
With global uncertainties still lingering, policymakers are expected to remain vigilant, as shifts in geopolitical dynamics and currency markets continue to shape the outlook for Bangladesh's trade, reserves and financial system.
