Bangladesh Seeks to Diversify Dollar Dependence Amid Global Currency Shift

The US dollar still dominates global foreign exchange markets and international trade transactions, but its influence is slowly waning. In Bangladesh, policymakers are exploring alternatives to reduce dependence on the dollar.

According to IMF figures, the dollar's share of foreign currency reserves decreased from 71% in 1999 to around 57% by the end of 2025, the lowest level recorded in the last 30 years. Central banks' gold reserves are increasing rapidly, with some exceeding US treasury securities on their balance sheets for the first time.

Bangladesh's economy is heavily reliant on the dollar, with almost all export revenues denominated in dollars and a significant portion of remittances received in dollar terms. However, this reliance comes with risks, including tighter monetary policy in the US resulting in depreciation of the taka against the dollar, higher import costs, and inflation.

Despite these risks, Bangladesh is taking steps to diversify its foreign exchange reserves, including considering joining the Cross-Border Interbank Payment System (CIPS) and settling trade with India in rupees and taka. These moves could reduce transaction costs and mitigate the risk of exchange rate changes.