The ongoing crisis in the Middle East has begun to impact Bangladesh's foreign exchange market, driving up the price of the US dollar for both remittance procurement and import payments.

On Tuesday, commercial banks were seen purchasing remittance at a maximum rate of Tk 122.90 per dollar. Consequently, the exchange rate for settlement of import letters of credit (LCs) has climbed to Tk 123, according to banking sources.

Just a week ago, the dollar rate for imports stood at approximately Tk 122.50. The recent jump of nearly 50 paisa per dollar has sparked concerns among businesses.

"Banks are capitalizing on the war situation in the Middle East," an importer told the media on Tuesday.

"The sudden hike in the dollar rate is increasing our import costs, the impact of which will eventually be felt by consumers,’ he said.

Banking officials noted that uncertainty caused by the conflict has led foreign remittance houses to demand higher rates. While remittance dollars were previously available at Tk 122, the rate has now neared Tk 123 per dollar.

Bangladesh Bank’s latest exchange rate report reflects this upward trend. The average price of the dollar, which was Tk 122.33 on March 3, has now risen to Tk 122.58.

A top official of a private commercial bank stated that the central bank has issued an informal message to banks to ensure the rate does not cross the Tk 123 threshold for now.

"However, if the pressure of import liabilities increases and supply remains tight, the price may rise further," the official said, adding that the central bank might need to provide dollar support from the national reserves to stabilize the market.

Industry experts emphasized that moving toward a fully market-based exchange rate is crucial to increasing the supply of greenbacks in the local market.