Bangladesh’s foreign exchange market experienced heightened turbulence throughout March 2026 as escalating conflict in the Middle East fueled global economic uncertainty. According to Bangladesh Bank, the national currency, the taka, saw a modest depreciation against the US dollar, with the interbank exchange rate shifting from Tk 122.30 at the end of February to Tk 122.75 by March’s close.
This change reflects an annual depreciation of approximately 0.61 percent against the dollar. While this decline was relatively mild, the forex market displayed significantly more volatility compared to previous months. After a period of relative stability since December 2025, daily fluctuations in spot exchange rates increased noticeably, signaling rising unease among traders amid ongoing geopolitical tensions.
Market participants responded to these uncertainties by intensifying their trading activities, particularly in interbank dollar transactions. The average daily volume of spot trades surged to $62.17 million in March from $37.27 million in February. Swap transactions saw an even sharper rise, nearly doubling from $53.54 million to $100.82 million daily. As a result, swap deals accounted for 62 percent of all interbank transactions, up from 59 percent the previous month.
Bangladesh Bank interpreted this shift toward swaps as a strategic effort by market players to manage elevated risk amid concerns over the conflict’s wider economic impact. Despite this surge in trading activity and volatility, the central bank observed that spreads between buying and selling rates in client transactions remained relatively steady, with only a slight increase in purchase spreads.
In light of these developments and cautious market sentiment, Bangladesh Bank significantly reduced its foreign exchange purchases during March, acquiring just $25 million compared to $1.53 billion in February. This measured approach was intended to balance liquidity without exacerbating market volatility.
The ongoing turmoil in the Middle East illustrates how geopolitical conflicts can extend their influence far beyond their immediate regions, affecting currency values and trading behaviors across global markets. For Bangladesh’s forex sector, the crisis prompted both increased exchange rate fluctuations and a notable rise in transaction volumes, posing complex challenges for policymakers striving to maintain stability amid uncertain economic conditions.
