Dollars that change hands in Dhaka’s interbank market have a remarkably concentrated origin. Ready-made garments account for the vast majority of Bangladesh’s merchandise export earnings, and the proceeds from shipments of T-shirts, trousers, knitwear, and jackets to buyers in Europe and North America form the largest steady stream of foreign currency entering the banking system. Remittances from overseas workers also provide a major source of foreign currency, but garment receipts arrive through formal letters of credit and contracts, which can make their timing more predictable.
Mechanics matter here. When a factory in Gazipur or Narayanganj ships an order, the buyer’s payment lands in the exporter’s account at an authorized dealer bank, usually in US dollars. Exporters may keep a portion in a retention quota account for future foreign currency needs, while the remainder is converted into taka to pay wages, utilities, and local suppliers. Each conversion can increase the bank’s available dollar supply, and banks then trade surpluses or shortfalls among themselves, setting the tone for daily FX trading in the taka.
Gross figures, however, overstate how much the sector truly adds. Much of the cotton, yarn, and fabric used by local factories is imported, often financed through back-to-back letters of credit opened against the export order. Those raw material payments flow back out of the country, so net dollar contribution depends on how much value is added locally. Knitwear makers, who often rely more on domestic spinning, may retain a larger share of earnings than woven garment producers who depend more heavily on imported fabric.
Timing introduces another variable that bank treasury desks watch closely. Exporters are required to bring their earnings back to Bangladesh within a specified period, but the timing of those transfers and their conversion into taka has varied. When the taka was expected to weaken, some exporters may have waited longer to bring dollars home or exchange them, hoping to get a better rate. Bangladesh Bank responded at different times by tightening repatriation rules and urging banks to sell export dollars quickly to prevent shortages in the market.
Data quality also became part of the story. Authorities discovered that the export figures published by the Export Promotion Bureau did not match those recorded by Bangladesh Bank. As a result, earlier export figures were revised downward. The correction helped explain why strong headline export growth had not translated into the expected dollar liquidity, and it gave market participants a sharper sense of how much foreign currency garments genuinely deliver.
Vulnerabilities follow naturally from such dependence. A slowdown in Western retail demand, a change in tariff policy in a major importing country, or labor unrest that disrupts production can ripple directly into dollar availability. Diversification into leather, pharmaceuticals, light engineering, and IT services has been discussed for years, yet none of these sectors comes close to matching garment volumes. Any assessment of taka FX trading conditions therefore begins, almost by default, with the order books of the country’s apparel factories. Seasonal patterns sharpen that link further. Shipments can increase ahead of Western holiday and seasonal retail cycles, and dealers expect liquidity to improve when those export receipts arrive. When garment orders slow down, dollar supplies can become tighter, forcing banks to rely more on remittances and support from Bangladesh Bank.
