Bangladesh’s foreign exchange market experienced increased volatility in March 2026 as tensions from the ongoing Middle East conflict heightened global economic uncertainty. According to the Bangladesh Bank’s monthly report, the interbank exchange rate saw a slight depreciation, moving from Tk 122.30 per US dollar at the end of February to Tk 122.75 by the close of March. This represented a modest 0.61 percent decline against the dollar compared to the same period last year.
The report highlighted a notable surge in exchange rate fluctuations throughout March, breaking a period of relative stability that had lasted since December 2025. Daily spot rate movements became more pronounced, reflecting growing unease in international markets. Although the spread between buying and selling rates within the interbank market remained steady, the margin on bank purchases from clients widened, rising to an average of Tk 1.19 per US dollar in March from Tk 0.99 in February.
In response to the escalating uncertainty, average daily spot transaction volumes jumped significantly to $62.17 million in March, up from $37.27 million in February. Banks intensified their dollar trading activities amid these turbulent conditions. Swap transactions also saw robust growth, with daily average volumes doubling from $53.54 million to $100.82 million during the same period. These swap deals accounted for 62 percent of total interbank transactions in March, up from 59 percent in February, indicating a strategic shift among market participants away from spot trading.
The Bangladesh Bank attributed this increased reliance on swap transactions to market unpredictability fueled by the Middle East conflict and its wider impact on global economic stability. Despite these fluctuations, overall pressure on Bangladesh’s foreign exchange market remained moderate. Reflecting a cautious approach to managing market stability amid external shocks, the central bank sharply reduced its foreign currency purchases to $25 million in March from a substantial $1.53 billion in February.
These developments underscore how geopolitical tensions in key regions can rapidly influence emerging markets’ currency systems by affecting liquidity, trading volumes, and exchange rate stability. Forex traders and investors are closely monitoring these shifts as the ongoing conflict continues to shape global currency valuations and investor sentiment across emerging economies.
