The dollar was set for its biggest weekly gain since mid-June, buoyed by the rise in oil prices, while the yen was poised for its largest weekly percentage decline in more than two months as the currency languishes at 40-year lows despite Japan’s pledges to buttress the currency.

Verbal efforts to support the yen have seen muted results, with Japan’s Finance Minister Satsuki Katayama once again reiterating on Friday the government’s readiness to take action in the foreign exchange market.
Some analysts see another intervention by Japanese officials as likely to have only a short-lived effect, similar to recent interventions in the currency, without coordinated steps such as a more aggressive path of rate hikes by the Bank of Japan (BOJ).The US Treasury Department on Thursday joined calls for rate hikes by the BOJ, warning that excessive currency volatility was undesirable.Markets have completely priced out any chance of a rate hike from the BOJ at its policy meeting next week, according to LSEG data.

“It’s not surprising that dollar-yen has gone up under the conditions that we’re facing. It’s a low-yielding currency facing a terms-of-trade shock with higher oil prices,” said Thierry Wizman, global FX & rates strategist at Macquarie Group in New York.

“So if there’s going to be a currency that the specs are going to go after in those conditions, it’s going to be the yen,” Wizman said.

“... And so that girds the whole thesis for why it’s been dollar-yen ... doing so well since the (Iran) war began, since oil prices went up.”

The war began on February 28.

The dollar index, which measures the greenback against a basket of currencies, inched up 0.01 percent to 101.46 and was up about 0.7 percent for the week, on track for its biggest weekly gain in five weeks.

Against the Japanese yen, the dollar weakened 0.02 percent to 163.81 but was up nearly 0.9 percent on the week, which would mark its strongest week against the currency since May 15.

On Thursday, the dollar hit 163.98, its strongest against the yen since November 1986.

The dollar has been rising in recent days as renewed strikes in the Iran war have caused a reversal in oil prices and again fanned inflation fears, in turn buoying expectations the US Federal Reserve may hike interest rates.

Circumventing the US Supreme Court, President Donald Trump has found a way to resurrect his tariff wall in a fashion that analysts say could prove more durable to legal challenges.

Just this week, Trump slapped sweeping new tariffs on 60 trading partners and saw 25-percent duties take effect on Brazilian products. Both cases involved an authority that has previously been used to impose levies.

Trump separately tapped an untested justification for 50-percent tariffs on many Canadian goods.

The actions and threats “underscore the president’s continued affection for tariffs, and that they are not going away as long as he is in the White House,” Asia Society Policy Institute senior vice president Wendy Cutler told AFP.

Trump’s latest tariffs of 10 percent to 12.5 percent apply to goods from 60 economies starting Friday.

They came after probes over forced labor concerns, under Section 301 of the Trade Act of 1974.

Cutler said this has a lower likelihood of being overridden by courts, noting Trump’s top trade official Jamieson Greer had carefully navigated procedural requirements before imposing duties.

More concerning was Trump’s targeting of Canada using the untested Section 338 of the Tariff Act of 1930, the Atlantic Council’s Josh Lipsky told AFP.

The justification was Canada’s alleged discriminatory treatment of US exports, with duties effective after a month.

“That’s more tariff-as-punishment” and could signal that Washington intends to keep less conventional tools at its disposal, Lipsky said.

This is an “uncertainty generator,” added Scott Lincicome of the libertarian Cato Institute.

Already, Trump’s newest tariffs face legal challenges from small businesses.

As courts have earlier allowed the use of Section 301 for imposing duties, arguments against Trump’s latest salvo would likely focus on official findings that justified action, Lincicome said.

“That’s just not something that courts typically want to weigh in on,” he added.

Still, some argue that Trump lacks such broad powers to impose sweeping tariffs.

Within months of returning to the presidency, Trump unleashed a barrage of tariffs on US trading partners.

He invoked emergency economic powers to impose a swath of these duties quickly, a move deemed illegal by the high court this February.

Trump’s sector-specific tariffs, imposed under different legal authorities on steel, automobiles and other goods, are unaffected.

Officials have since launched Section 301 investigations, including on forced labor, to reinstate duties.

Lincicome warns however that past investigations were more substantive. A probe into China during Trump’s first term took a year to result in duties.

This time, probes into 60 economies including major partners like the EU and India spanned just four months.

US tariffs are tough to undo. Former president Joe Biden, the Democrat who succeeded Trump after his first term, kept his predecessor’s tariffs on China intact.

Even if a future leader wanted to reverse Trump’s duties, revenue considerations will complicate the situation, Lipsky predicts.

Many countries were likely hoping the worst of trade wars are behind them, he said, but some may now have doubts.

The Trump administration has struck 19 framework or reciprocal tariff deals. Yet, threats of further duties loom with Washington investigating 16 economies including China, the EU and Japan over excess industrial capacity.

“The administration has been careful not to exceed the tariff levels agreed to in bilateral agreements,” Cutler said. “But partners are concerned that this assurance may not hold.”

Chad Bown of the Peterson Institute for International Economics believes Trump is missing a chance to address bigger problems like China’s rare earth export curbs.

Trading partners have to “fight a two-front trade war –- dealing with Trump’s tariffs and China’s export restrictions –- instead of just being able to focus on China,” he said.

While countries have expressed disappointment, Cutler said, there are no signs of retaliation, “knowing full well they would risk further US tariff escalation.”

Speaking at the inception workshop on “Analysis of the Inclusive Instant Payment System (IIPS) in Bangladesh and Cross-Border Remittance as a Use Case” at PRI in Banani, he said financial inclusion, digital payments and the IIPS should be pursued as a single, integrated national strategy to reduce payment costs.

Mansur said reducing the cost of digital transactions is essential to boosting adoption, adding that temporary incentives or subsidies for digital payments could yield greater long-term benefits than continuing large-scale subsidies in other sectors.

He also called for making smartphones and internet services more affordable to bridge the digital divide and promote nationwide financial inclusion.

The former BB chief further observed that restoring public confidence in the banking system is critical to reducing cash dependency and encouraging wider use of formal financial channels.

Highlighting the untapped investment potential of the Bangladeshi diaspora, he said establishing dedicated mechanisms for Non-Resident Bangladeshis (NRBs) could help repatriate an estimated $2-3 billion in investments through formal channels.

Director General of the Bangladesh Institute of Bank Management (BIBM) Ezazul Islam said the IIPS has the potential to significantly cut digital payment costs, strengthen financial inclusion, and enhance the efficiency and competitiveness of Bangladesh’s payment ecosystem.

He said wider adoption of digital payments and IIPS could encourage greater use of formal financial channels, improve transaction traceability, and contribute to higher tax compliance and a more transparent economy.

Ezazul stressed that the long-term success of IIPS hinges on a robust governance framework, appropriate commercial incentives, sustainable pricing, effective dispute resolution mechanisms, sound settlement risk management, and a comprehensive cost-benefit assessment.

Chairing the session and delivering the opening remarks, PRI Chairman Zaidi Sattar underscored the macroeconomic significance of remittances, which currently account for around 6 percent of Bangladesh’s GDP, and called for policy measures to redirect these flows from consumption toward productive investment.

He also pointed to the digital divide within the country’s financial sector, noting that many of the roughly 7 lakh Bangladeshi migrants in Oman, cited as an illustrative example, continue to prefer informal hundi channels over formal banking systems to send money home.

A panel discussion featured Mohammad Jahid Iqbal, additional director of the Payment Systems Department at Bangladesh Bank, and Sayed Shaikh Ibna Jilany, vice president (Remittance, Financial Services, Commercial) at bKash Limited.

Iqbal said Bangladesh Bank is developing the IIPS on the open-source Mojaloop platform to cut costs, enable local customisation, and connect banks, payment providers and eventually microfinance institutions through a more integrated digital infrastructure.

Launched in November 2025, he said, the system will support feature-phone access, simpler account opening, fewer failed transactions, and stronger fraud protection through the Tazama toolkit.

Jilany shared perspectives from Bangladesh’s leading mobile financial services provider on the opportunities and challenges of integrating private-sector platforms into an interoperable instant payment ecosystem, touching on consumer protection, affordability and user trust.

Participants at the workshop, organised with support from the Gates Foundation, discussed broader opportunities and challenges in developing an inclusive instant payment ecosystem, including interoperability, regulatory readiness, consumer protection, affordability, and the potential to make remittance transfers faster and more accessible to underserved populations.

Bangladesh’s major export sectors rely heavily on chemicals, but the country still imports most of its chemical needs despite having a domestic market estimated at $6 to $8 billion that is growing by 10 to 15 percent annually.

Developing a strong domestic chemical industry is essential to reduce import dependence and improve the competitiveness of export sectors, stakeholders said at a seminar yesterday.

The seminar titled “Backward Linkage Development of Chemical-Dependent Key Export-Oriented Industries: Current State & Issues” was organised by the Dhaka Chamber of Commerce and Industry (DCCI) at its auditorium in the capital.

Chemicals are a key input for industries such as textiles, garments, pharmaceuticals, leather, construction, agriculture and plastics. The textile and RMG sector alone uses more than 2,500 chemicals, including dyes, auxiliaries and finishing agents. Pharmaceutical companies require active pharmaceutical ingredients (APIs), excipients and solvents, while leather manufacturers depend on tanning chemicals and dyes.

Rising demand has led to higher chemical imports, with Bangladesh importing $6.2 billion worth of chemicals in FY25, up 17.8 percent from the previous year. Although the pharmaceutical industry exports products to more than 150 countries, it still imports around 90 percent of its APIs.

Chemicals now account for about 10 percent of the country’s total imports, while chemical imports are more than 15 times higher than exports.

BARRIERS HOLD BACK SECTOR

At the seminar, speakers highlighted several challenges facing the sector, including high tariffs, logistics problems, inadequate infrastructure and weak supply chains.

In his keynote presentation, Asif Rabbani, managing director of SR Chemical Industries Ltd, said policy reforms and stronger industrial capacity are needed to develop the sector.

DCCI President Taskeen Ahmed said the competitiveness of Bangladesh’s RMG, textile, leather and pharmaceutical sectors depends on a strong chemical supply chain.

He said industrial growth is being affected by heavy reliance on imported dyes, chemicals and specialised raw materials, along with tariff complexities, lengthy environmental clearance processes and logistics bottlenecks.

KSM Mostafizur Rahman, president of the Bangladesh Agrochemical Manufacturers Association, said high import duties on raw materials are hurting the agrochemical industry and called for stronger policy support.

Md Akter Hossain, director at the Directorate General of Drug Administration, said entrepreneurs are being held back by delays in developing the API Industrial Park.

Md Shaheen Ahamed, chairman of the Bangladesh Tanners Association, said the leather industry remains highly dependent on imported chemicals and urged the government to reduce import-stage duties.

ROADMAP NEEDED TO BUILD LOCAL CAPACITY

Stakeholders also called for a clear roadmap for chemical backward linkage development. Taskeen Ahmed said such a roadmap is now a strategic necessity to protect the future of Bangladesh’s export sector.

Md Salim Ullah, director general of the Bangladesh Institute of Management, said the government is reforming the National Industrial Policy. He said the private sector should decide whether the chemical backward linkage sector requires a separate policy or a dedicated chapter in the existing industrial policy.

Md Moniruzzaman, director of the Bangladesh Knitwear Manufacturers and Exporters Association, said the success of RMG backward linkage industries through government support could serve as a model for the chemical sector by attracting investment and creating jobs.

Sheikh HM Mustafiz, director of the Bangladesh Garment Manufacturers and Exporters Association, said uninterrupted energy supply, supportive policies, compliance with international quality standards and specialised industrial zones are essential for the sector’s growth.

M Mosaddek Hossain, senior vice-president of the Bangladesh Association of Pharmaceutical Industries, stressed the need to strengthen the chemical ecosystem through expanded research activities and skilled manpower development.

Abul Fatah Md Baligur Rahman, member for development at the Bangladesh Council of Scientific and Industrial Research (BCSIR), said stronger cooperation between industries and academia is needed to accelerate economic growth.

“BCSIR is working to add significant value to export products and build competitive import-substitute industries by mobilising local resources,” he said.

Suraiya Sultana, second secretary (Customs: Export and Bond) at the National Board of Revenue, said tariff rates are gradually being reduced to encourage local chemical production.

She added that the bonded warehouse licensing process has been fully digitised to reduce difficulties for entrepreneurs.

Stakeholders said achieving 60 percent chemical backward linkage could save billions of dollars in foreign exchange, increase export competitiveness, create thousands of skilled jobs and strengthen Bangladesh’s industrial base.

The Bangladesh Securities and Exchange Commission (BSEC) is planning to conduct phased inspections of around 100 brokerage firms as part of its efforts to prevent major irregularities and strengthen investor protection amid rising trading activity in the capital market.

BSEC Chairman Masud Khan recently said at a meeting that the regulator has undertaken several reform initiatives to improve oversight of brokerage houses. As part of these measures, the commission is introducing regular and more frequent audits and inspections to detect and prevent serious misconduct before it escalates.

According to BSEC officials, the commission has already approved inspections of the first 10 brokerage firms. The inspections will examine their overall operations, compliance with securities laws, the safety of clients' funds and securities, and other relevant regulatory issues. Each inspection team has been instructed to submit its report within 30 working days.

Speaking to The Business Standard, BSEC Executive Director and spokesperson Abul Kalam said, "The commission has already approved inspections of 10 brokerage houses. Its primary objective is to prevent major irregularities before they occur."

He said trading has increased significantly since the new commission assumed office and investor confidence has gradually improved. As market activity expands, the commission believes there is a greater risk that some market participants may attempt to engage in irregular practices. "We want to strengthen supervision so that investors do not suffer losses due to misconduct at brokerage firms," he added.

According to BSEC sources, the eight brokerage firms selected for routine inspection are Howlader Equity Services, International Leasing Securities, Ershad Securities, R Chowdhury Securities, Shyamol Equity Management, Vision Capital Management, SAR Securities, and MAH Securities. In addition, Azam Securities and Synthia Securities will be inspected as part of their licence renewal process.

The inspections will review brokerage and dealer operations, compliance with securities laws and regulations, the status of consolidated customer accounts (CCA), and any other issues deemed relevant by the regulator. Inspection teams will also assess firms' compliance with anti-money laundering and counter-terrorism financing (AML/CFT) requirements.

Regulatory officials say technology-based surveillance has been strengthened in recent years, but on-site inspections remain essential to verify the actual condition of brokerage firms. Particular emphasis will be placed on the management of clients' funds and securities, record-keeping practices, and the effectiveness of internal control systems.

To enhance oversight, the BSEC has recently made it mandatory for brokerage houses to use uniform and uneditable back-office software supplied by approved vendors. The system is designed to prevent manipulation of back-office data and ensure that the actual status of clients' funds and securities can be monitored directly by the stock exchanges.

According to the regulator, combining technology-driven supervision with regular inspections will improve accountability and strengthen governance across the brokerage industry.

Market participants note that previous inspections and investigations uncovered various irregularities at some brokerage firms, including the misappropriation of clients' funds and securities, unauthorised trading, commingling of client and company funds, violations of margin lending rules, misuse of omnibus and consolidated customer accounts, and accounting irregularities.

Other issues identified over the years include failure to comply with KYC requirements, weak implementation of AML/CFT rules, poor record-keeping, non-compliance with net capital requirements, submission of inaccurate information to regulators, delays in resolving customer complaints, and weak internal controls.

In some cases, allegations of market manipulation, wash trades, circular trading, and misuse of insider information have also come under regulatory scrutiny.

However, BSEC officials stressed that these irregularities are not representative of all brokerage firms. They said the inspections are intended not as a punitive exercise, but as a preventive measure to identify risks early, improve compliance, and better protect investors.

The importance of stronger oversight has become evident following several high-profile brokerage scandals in recent years that resulted in significant investor losses.

According to the Dhaka Stock Exchange (DSE), Tamha Securities Ltd misappropriated Tk139.67 crore by illegally using additional software and providing fake investment information. The amount included Tk92.57 crore in cash and Tk47 crore in securities, while around 720 complaints involving Tk52.39 crore were filed against the firm.

In June 2021, the DSE suspended Banco Securities Limited after detecting a Tk128 crore shortfall in its consolidated customer account, comprising Tk66.11 crore in cash and Tk61.97 crore in securities.

Crest Securities Ltd abruptly shut down its operations without prior notice. A DSE investigation later found a Tk65.30 crore deficit in its consolidated customer account. The brokerage was linked to 6,480 complaints involving 21,180 BO accounts, while only Tk1.32 crore of Tk48 crore in investor claims has so far been settled.

The DSE also suspended Shah Mohammad Sagir & Company Ltd after discovering that it had misappropriated Tk13.74 crore. The firm faces 4,187 complaints, with 1,081 investor claims still unresolved.

Meanwhile, Moshihor Securities allegedly misused Tk161 crore, including Tk68.58 crore in investors' cash and Tk92.35 crore worth of investors' shares, while reportedly evading regulatory oversight through multiple servers and databases.

The government has proposed making it mandatory for foreign digital platforms to establish a registered presence in Bangladesh before they can run advertisements or conduct online business in the country to strengthen regulation of cross-border digital commerce and improve tax compliance.

If adopted, the draft "Cross-Border Digital Commerce Policy 2026" would require platforms such as Facebook, YouTube and Google to register before publishing digital advertisements targeting local consumers in exchange for paying applicable value-added tax, income tax and other taxes.

The Ministry of Commerce published the draft policy on its website on 22 July, inviting public feedback until 6 August.

The proposed policy also calls for introducing a cross-border escrow payment system, integrating payment infrastructure with internationally accepted payment networks, mandating registration of foreign digital commerce companies and providing policy support to expand digital exports.

Under the draft, foreign digital commerce companies must obtain a digital business identity registration from the commerce ministry before advertising or selling goods and services online. After registration, they will be allowed to advertise products and services in compliance with tax, VAT and other legal requirements.

The proposed policy also states that social media and over-the-top platforms may only carry advertisements for lawful products and services. Advertisements promoting counterfeit, prohibited or misleading products and services will be banned.

To make international digital transactions safer, the government plans to launch a cross-border escrow service under the central bank's supervision to protect both buyers and sellers.

It also proposes measures to facilitate repatriation of export earnings by registered digital businesses and simplify payments for imports.

For imported goods, customs documents, including bills of entry, bills of lading and invoices, will have to identify not only the buyer but also the digital platform or online marketplace through which the transaction was made.

The policy also seeks to help micro, small and medium enterprises enter international markets by introducing policy support and insurance facilities for parcel-based exports. Other proposed initiatives include helping businesses explore overseas markets, improve digital capabilities and meet international quality standards.

The government will also consider treating export earnings generated through digital commerce in the same way as conventional exports, making them eligible for financial incentives.

The draft also proposes policy support for private-sector investment in domestic and overseas processing centres, warehouses, drop shipping, entrepot trade and merchanting trade.

It contains several consumer protection measures to curb fraud in digital commerce. It prohibits the online sale of counterfeit, adulterated or fraudulent products, as well as digital trade involving online gambling, betting, lotteries and goods or services banned under Bangladesh's import and export regulations.

Sellers will be required to accept returns and issue full refunds through the original payment method if customers receive defective, counterfeit, expired or non-compliant products.

Businesses must also clearly disclose their after-sales service, warranty, guarantee and refund policies. The draft also proposes introducing an alternative dispute resolution mechanism for cross-border digital transactions.

It further seeks to expand business-to-business, business-to-consumer and business-to-business-to-consumer digital trade, while coordinating with the National Board of Revenue to review online import value thresholds.

A double-digit drop in capital machinery imports and falling export revenues have driven Bangladesh's trade deficit up by nearly 24 percent to $23.98 billion in FY 2025-26, leaving a historic $35.5 billion remittance surge to single-handedly cushion the external economy from severe distress.

The external trade is presenting a stark, two-way picture. On one hand, a slowdown in industrial raw material and capital machinery imports points to sluggish domestic manufacturing; on the other, export earnings have failed to meet expectations. Consequently, the country's trade imbalance has worsened, driving the foreign trade deficit up by nearly 24 percent.

However, a record surge in foreign remittances has significantly cushioned the pressure on external transactions and played a pivotal role in boosting foreign exchange reserves.

Data from Bangladesh Bank's Economic Indicators and Balance of Payments (BoP) reports, combined with Export Promotion Bureau (EPB) statistics, paint a challenging macroeconomic landscape. Economists attribute this subdued trade momentum in FY 2025-26 to global uncertainties, high interest rates, financial distress among major industrial conglomerates, rising production costs, and a lingering deficit in business confidence.

Trade deficit surges to $23.98 billion

The gap between Bangladesh's imports and exports widened sharply during the first 11 months (July–May) of the fiscal year 2025-26, according to Bangladesh Bank data.

Trade Deficit: $23.98 billion
This represents a 23.73 percent (nearly 24%) increase compared to the $19.38 billion trade deficit recorded during the same period of the previous fiscal year. Economists warn that if export growth remains sluggish, maintaining this import burden could severely strain the external sector over the long term.

In FY 2025-26, import settlements via Letters of Credit (LCs) stood at $70.4 billion, reflecting a negligible growth of 0.09 percent compared to $70.3 billion in the preceding year. Because import settlements serve as a key barometer for industrial activity, this stagnation signals that the manufacturing sector has yet to regain full momentum.

While fresh LC openings increased by 7 percent to $74.7 billion—hinting at potential future recovery—business owners remain cautious regarding major capital commitments.

The most concerning contraction occurred in essential production inputs:

Industrial Raw Materials: Fell 3.33 percent to $23.18 billion.
Capital Machinery: Dropped 10.68 percent to just $1.80 billion, highlighting a sharp decline in long-term investment.
Consumer & Intermediate Goods: Declined by approximately 7 percent each.
Energy (Exception): Petroleum imports bucked the trend, rising 6.42 percent to $10.68 billion.
Bankers and industrial leaders noted that following recent political shifts, several prominent business groups—including Beximco Group, Nassa Group and Gazi Group—have had factory operations suspended or restricted to just 30 to 40 percent capacity. Coupled with high interest rates and rising debt costs, new investments have ground to a halt.

Exports miss $55 billion target

The domestic manufacturing slowdown directly spilled over into export performance. Total merchandise exports for FY 2025-26 reached approximately $48 billion—a 0.58 percent drop year-on-year, missing the government's target of $55 billion.

The Ready-Made Garment (RMG) sector, which accounts for nearly 80 percent of total exports, generated around $38.7 billion. Exporters attributed the shortfall to:

US retaliatory tariffs and intense competition in European markets.
Softening global demand and high domestic logistics costs.
Persistent energy shortages and high interest rates.
Although June recorded a 26 percent spike in exports, analysts note this was primarily driven by a higher number of working days rather than a genuine surge in international demand or new market penetration.

Record remittances provide critical relief

Amid trade pressures, the remittance sector emerged as the economy's strongest pillar. Bangladesh received a record $35.5 billion in remittances in FY 2025-26, marking a 17.3 percent increase year-on-year.

This robust inflow significantly narrowed the current account deficit and helped generate a $4.16 billion surplus in the financial account, preventing severe balance-of-payments distress.

In response to trade headwinds, the government has initiated steps to launch the country's first Free Trade Zone (FTZ). Bangladesh Bank has already issued comprehensive guidelines allowing duty-free import, storage, processing, repackaging, re-labelling and re-exporting of raw materials on a consignment basis without needing conventional LCs. Business leaders anticipate this move will reduce lead times, optimise working capital and enhance supply chain efficiency.

Commenting on the economic trajectory, Mohiuddin Rubel, Founder & CEO of Bangladesh Apparel Voice and former Director of BGMEA, emphasised the need for structural policy support.

"Exporting is not solely dependent on foreign demand; it is directly tied to domestic production capacity, raw material supply, energy, logistics, and the investment climate. The decline in raw material and capital machinery imports is a clear warning sign for future production. The investments we lack today will manifest as reduced output and exports months down the line," he added.

"Global competition is fierce, with rival nations like Vietnam and India leveraging various Free Trade Agreements while Bangladesh prepares for LDC graduation. To stay competitive, we must reduce the cost of doing business, enhance port efficiency, guarantee uninterrupted energy, and accelerate trade facilitation reforms. The FTZ is a positive initiative, but realising its full potential requires effective policy execution, rapid customs clearances, product diversification and new market entry," said Mohammad Hatem, President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

There is no alternative to reforms to increase competitiveness. Professor Mustafizur Rahman, distinguished fellow of CPD, told UNB, "The coming days will be more difficult due to global conflicts, transition from LDCs and free trade agreements with competing countries."

According to him, Bangladesh's competitiveness must be increased by reducing business costs, improving logistics systems, implementing a National Single Window, facilitating trade, diversifying export products and quickly concluding a Free Trade Agreement (FTA).

Entrepreneurs in the garment sector also say that competing countries like India and Vietnam are getting additional benefits in the European Union market. Therefore, reducing production costs, ensuring energy supply and increasing the efficiency of ports and logistics are the biggest demands of the time.

Masrur Reaz, Chairman and Founder of Policy Exchange Bangladesh and former senior economist of the World Bank Group, told UNB that there is no alternative to product diversification to enhance Bangladesh's export share in global markets.

Bangladesh earns 83 percent of its export revenue from the single Ready-Made Garment (RMG) sector. Whereas Vietnam and other competing countries export a much more diversified range of products, the export volumes of those countries are increasing at the desired pace, he pointed out.

Masrur also emphasised the upgrading of smart technology and the appointment of technically skilled personnel in the manufacturing sector through a long-term policy to increase exports and ensure stability in the domestic economy.

Stocks fell sharply this week, snapping a three-week winning streak as investors rushed to lock in short-term gains amid uncertainty over proposed amendments to margin lending rules and renewed geopolitical tensions.

The benchmark index of the Dhaka Stock Exchange (DSE) retreated after touching a near two-year high above the 5,900-point mark, wiping out all the previous week's gains.

Market operators said the strong rally in recent weeks encouraged many investors to book profits, while uncertainty surrounding the proposed margin financing rules prompted others to adopt a cautious stance.

"The recent rally encouraged many investors to book profits, while uncertainty over the proposed margin rules prompted others to stay on the sidelines," said a leading stockbroker.

He added that escalating tensions in the Middle East further weakened investor sentiment, prompting a broader risk-off mood across financial markets.

Investors are now awaiting greater clarity on the final margin financing rules, which are expected to influence market liquidity and sector-specific demand in the coming weeks, he said.

The market correction came just a week after the DSEX crossed the 5,900-point milestone for the first time in nearly two years, supported by a series of regulatory reforms that had improved investor confidence and revived market momentum.

Sentiment weakened after the securities regulator unveiled draft amendments to the margin financing rules aimed at strengthening risk management and governance in the capital market.

Under the proposed rules, banks and financial institutions with a price-to-book (P/B) ratio above three and insurance companies with a P/B ratio above one would become ineligible for margin financing, raising concerns that reduced access to leveraged buying could curb demand for many stocks in those sectors.

Insurance shares remained under heavy selling pressure throughout the week as investors feared the proposed restrictions would reduce margin financing eligibility.

Profit-taking also spread across major sectors, including insurance, engineering, power, pharmaceuticals, food, banking and telecommunications, after their strong gains in recent weeks.

The market traded all five sessions during the week, with three ending lower and two posting gains. However, renewed geopolitical tensions and policy uncertainty triggered broad-based selling in the final session.

Consequently, the benchmark DSEX index shed more than 96 points, or 1.63 per cent, to close the week at 5,804. The decline also ended a three-week advance during which the benchmark index had gained about 248 points.

According to EBL Securities, persistent uncertainty surrounding the proposed margin rule amendments, coupled with renewed geopolitical tensions in the Middle East, weakened investor confidence and reduced overall risk appetite.

The brokerage said investors initially reacted negatively to the proposed margin rules, particularly concerns over the possible exclusion of many insurance stocks from margin loan eligibility.

Although hopes of regulatory adjustments later helped the market recover temporarily, investors ultimately adopted a wait-and-see approach amid unresolved policy uncertainty and escalating geopolitical risks, triggering widespread profit-taking across sectors.

Selective heavyweight stocks, including Square Pharmaceuticals, Walton Hi-Tech Industries, Beximco Pharmaceuticals, BRAC Bank and BSRM, accounted for nearly one-third of the benchmark index's weekly decline.

The DS30 Index, comprising blue-chip companies, fell 35 points to 2,192, while the DSES Index, which tracks Shariah-compliant stocks, declined 24 points to 1,183.

Trading activity also slowed markedly. Total turnover on the DSE stood at Tk 53.16 billion during the week, down from Tk 73.75 billion a week earlier. Consequently, average daily turnover dropped 28 per cent to Tk 10.63 billion from Tk 14.75 billion in the previous week, indicating that many investors preferred to remain cautious after the recent rally.

Textile companies accounted for the largest share of weekly turnover at 17.6 per cent, followed by pharmaceuticals with 13.3 per cent and banking with 8.8 per cent.

Market breadth turned sharply negative as 240 issues declined, 120 advanced and 26 remained unchanged, reflecting broad-based selling pressure.

Malek Spinning Mills emerged as the week's most-traded stock with transactions worth Tk 1.30 billion. It was followed by Techno Drugs, Shepherd Industries, IPDC Finance and City Bank.

The Chittagong Stock Exchange (CSE) also ended the week lower. Its All Share Price Index (CASPI) dropped 194 points to 15,620, while the Selective Categories Index (CSCX) lost 164 points to close at 9,536.

The real interest rate on deposits measures the actual return on savings after adjusting for inflation.

Real returns on fresh deposits turned positive in June 2025 and remained so until February this year. However, they fell to nearly zero by the end of March 2026.The observation was made in Bangladesh Bank's latest 'Banking Sector Update', which reviewed developments up to March 2026The publication said depositors' purchasing power remained under pressure as the gap between average deposit rates and inflation remained negligible."Depositors continue to experience near-zero real returns," the central bank said in the report.

The report stressed that maintaining an appropriate balance between deposit and lending rates is essential to protect depositors while ensuring businesses and households continue to have access to affordable credit.

The 12-month average inflation rate stood at 8.6 per cent in March, while the average deposit rate remained almost at the same level, leaving the real return on deposits close to zero.

"It is important to balance interest rates to protect depositors while promoting affordable credit," the publication said.

Economists said persistently low or negative real returns discourage financial savings, weaken confidence in the banking system and encourage households to shift funds into alternative assets such as land, gold and foreign currency.Financial regulatory updates

They noted that the 12-month average inflation rate rose to 8.68 per cent in June, while deposit rates remained broadly unchanged or below inflation, pushing real returns back into negative territory.

The report, however, identified several structural weaknesses that continue to weigh on the banking sector, including a high level of non-performing loans (NPLs), weak compliance with prudential regulations and inadequate discipline in maintaining the advance-deposit ratio (ADR).

According to the central bank, elevated NPLs continue to constrain banks' profitability, reduce their lending capacity and increase provisioning requirements.

The report also pointed to lapses in maintaining prudent ADR levels, indicating that some banks remain exposed to liquidity risks despite improvements in overall sector liquidity.

It cautioned that these vulnerabilities require sustained policy attention and stronger regulatory enforcement.

"Without these corrective measures, current vulnerabilities could evolve into systemic risks and trigger wider market volatility, undermining financial stability and economic development," the report said.

Bangladesh Bank has been pursuing a series of reforms aimed at restoring confidence in the banking sector.

These include strengthening bank governance, improving loan classification and provisioning standards, enhancing supervision, and aligning the country's regulatory framework with international banking standards.

The report said ensuring positive real returns on deposits would be important for mobilising domestic savings, which remain a key source of financing for private-sector investment and economic growth.

It also emphasised that a sound banking sector is indispensable for maintaining macroeconomic stability, supporting productive investment and strengthening financial resilience.

The country’s sluggish garment exports are unlikely to recover in the coming months as the war in the Gulf drives up energy costs, feeds inflation in key Western markets and leaves retailers with more unsold stock, according to exporters and major international buyers.

Apparel makers say buyers remain cautious and are avoiding large orders, even though uncertainty over US tariffs has eased.

Fresh apparel orders largely depend on retail sales in the United States and Europe. But the dragging US-Israel’s war on Iran has triggered an energy shock that is rippling through the global economy.

Higher energy prices have pushed up inflation in Bangladesh’s main export markets, weakening demand for clothing in Europe, Asia and the US. At home, rising energy costs have also increased production costs for manufacturers.

“We are facing a perfect storm now,” said Abrar H Sayem, director of Sayem Group, which supplies clothing to brands including US Polo Assn, British Ben Sherman and European fast-fashion retailer NewYorker.

The country’s readymade garment (RMG) sector earned $38.70 billion in the recently concluded fiscal year 2025-26 (July-June), down 1.64 percent from $39.35 billion in FY25, according to Export Promotion Bureau (EPB) data.

The FY26 decline was largely blamed on months of uncertainty over US tariffs. Although the Trump administration kept the newly announced tariff unchanged at 10 percent on Friday, easing one source of uncertainty, exporters say the broader market remains weak.

“The order placement is still slow as the global volatility is lingering,” said AK Azad, managing director of Ha-Meem Group, a leading garment exporter to the US.

The war, oil prices and old inventories have been affecting buyers’ decisions, Azad added.

“Western buyers are also going through a difficult period, which has affected their purchasing decisions,” said Tapan Chowdhury, managing director of Square Apparels, which also exports garments to the US and Europe.

“We have the challenges of continued energy supply, but still we are hopeful that the market will recover in the near future,” he also said.

Meanwhile, exporters also say the country’s heavy reliance on five basic garment items has left the industry vulnerable in an oversupplied market marked by intense price competition.

Western buyers say the country’s export performance is unlikely to improve over the long term unless it shifts towards higher-value products.

Bangladesh mainly exports trousers, T-shirts, formal woven shirts, underwear and sweaters. Together, these account for 78 percent of total garment exports, while about 95 percent of factories produce these five categories.

“Our old model of selling basic garments is no more relevant as India has been showing resilience in this segment recently because of incentives paid to the exporters,” said Md Fazlul Hoque, managing director of Plummy Fashions Ltd, whose buyers include Tommy Hilfiger, Calvin Klein and Zara.

“If we want to remain competitive in global supply, we have to maintain the growth, which is difficult to gain now,” said the exporter. “So, we have to wake up for positive growth,” he added.

Hoque said improving gas supplies and lowering bank lending rates should be priorities as manufacturers continue to face rising production costs.

Anwar-Ul-Alam Chowdhury (Parvez), former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said Vietnam is in a much stronger position than Bangladesh in the current global supply chain because its production costs have remained stable, it has higher value addition, and it enjoys shorter lead times to Europe and the US.

A senior executive at a European garment retailer, who asked not to be named, said Bangladesh would struggle to maintain $50 billion in RMG exports by 2030, let alone achieve its $100 billion target, unless it diversified its product range.

He said the global market for the five main garment items exported by Bangladesh is already saturated. “We do not have any chance for further expansion for these five products. We need high-end garment items at affordable prices.”

Bangladesh’s graduation from least developed country (LDC) status and the subsequent loss of preferential market access could make the country a more expensive sourcing destination than its competitors, reducing its competitiveness in key export markets.

The buyer said major retailers and brands have already begun planning to source more products from other countries ahead of Bangladesh losing GSP benefits over the next few years, even if the transition is delayed.

He also said that if India secures duty-free access to the European market through a bilateral free trade agreement (FTA), buyers may push for even lower prices from Bangladeshi exporters supplying Europe.

Faisal Samad, a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the organisation would hold roadshows in the US, Japan and South Africa over the next few months to help revive export orders.

The BGMEA is also setting up a design studio to help exporters become more competitive by analysing markets, products and the latest fashion trends, he said.

Crude oil futures prices were more than 4 percent lower on Friday after sources said that China had initiated a push to resume stalled peace talks between the United States and Iran, but remained on track for hefty weekly gains.

Both Brent and US West Texas Intermediate crude have rallied this week as the United States and Iran exchanged missile strikes, traffic through the Strait of Hormuz fell to a trickle and Yemen’s Houthis attacked shipping in the Red Sea.

Brent futures settled at $96.78 a barrel, down $3.91, or 3.88 percent, having settled above $100 in the previous session for the first time since May.

The contract remained on course for a gain of nearly 10 percent this week.

West Texas Intermediate (WTI) futures finished at $89.31 a barrel, down $2.88, or 3.12 percent, on track for an 8.27 percent weekly rise.

“There’s nothing this market loves more than hope,” said John Kilduff, partner at Again Capital.

“Nobody wants to get suckered, so any hint this may get settled they will take,” Kilduff said. “Nobody wants to think we’re on a one-way course.”

Energy markets were in a precarious state on Friday, said Phil Flynn, senior analyst with Price Futures Group.

“Overall stocks remain pretty tight — and that situation could turn on a dime, so it’s worth keeping a close watch as things develop,” Flynn said.

US President Donald Trump promised “major military punishment” for Iran and its Houthi allies after the strikes on two Saudi oil tankers in the Red Sea.

Iran had been pressing the Houthis to close the Bab el-Mandeb gateway to the Red Sea if the United States continues to attack Iranian power infrastructure.

It is the second most important route for energy shipments after the Strait of Hormuz at the mouth of the Gulf.

Additionally, the Houthis declared on Monday that they were imposing a naval blockade on Saudi Arabia, which had been diverting its oil via pipeline to get around Iran’s closure of the Strait of Hormuz.

Daily vessel transits through the strait were steady at three for each of the past three days, preliminary ship-tracking data from Kpler showed.

Another two ships — including empty very large crude carrier Noble — entered the Gulf via the strait on Thursday.

Meanwhile, at Bab el-Mandeb, commodity vessel transits totaled 32 on July 23, up from 26 the day before, Kpler data showed, with two crossings for July 24 so far.

“In the right seas, ships are still moving ... so it’s not a complete blockade as some might have feared,” said Giovanni Staunovo, a UBS analyst.

Analysts at JPMorgan said in a note that each additional month of disruption to oil supply would add around $7 to $8 a barrel to Brent, lifting monthly average prices to around $114 a barrel if disruptions extend to three months.

Elsewhere, Russia said on Friday that its forces struck three Ukrainian ports overnight targeting infrastructure — including loading and unloading facilities and fuel reserves — which supported Ukraine’s armed forces.

On Thursday, Kazakhstan’s energy ministry said oil companies temporarily reduced production after suspected Ukrainian drone attacks forced the country’s main Black Sea export terminal to close.

The number of new beneficiary owner (BO) accounts rose sharply in the first half of 2026, signalling renewed investor confidence as the recovering stock market attracted fresh participants after years of subdued activity.
Advertisement

Data from the Central Depository Bangladesh Ltd (CDBL) showed that 34,877 new BO accounts were opened between January and June, reflecting growing interest from retail investors amid a sustained recovery in share prices and improving market sentiment.

The total number of BO accounts stood at 1,675,252 at the end of June, up from 1,640,375 on December 30 last year, according to CDBL data.

A BO account is mandatory for trading shares on the stock market and applying for initial public offerings (IPOs). Investors open these accounts through depository participants, typically stockbrokers or merchant banks.

Market operators said the rise in new BO accounts is one of the clearest signs that confidence is gradually returning to the equity market following a prolonged downturn that kept many investors on the sidelines.

"It is a good sign for the country's stock market as new investors are entering the market," said Md Akramul Alam, head of research at Royal Capital, while commenting on the rise of new BO accounts.

He said both new and existing investors had gradually returned as the market showed signs of recovery and normalisation following the national election and the appointment of a new chairman at the Bangladesh Securities and Exchange Commission (BSEC).

The benchmark DSEX Index climbed nearly 939 points to 5,804 in nearly seven months of 2026 while the market capitalisation added Tk 230 billion to reach Tk 7.01 trillion during the period, buoyed by improved sentiment amid growing optimism over sweeping regulatory reforms.

Market analysts said the rebound marks a significant turnaround after years of weak market performance and reflects the gradual return of investor confidence as the newly elected government steps up efforts to restore discipline in the capital market and revive the broader economy.Investment Promotion Services

Daily turnover has also improved compared with the levels seen during much of the previous year, indicating stronger market activity.

The recovery was driven by a combination of political and economic factors, including easing domestic uncertainty, stronger foreign exchange reserves, a more stable exchange rate, moderating inflation and renewed policy attention to the capital market.

Investor sentiment received another major boost following the appointment of renowned chartered accountant Masud Khan as chairman of the Bangladesh Securities and Exchange Commission (BSEC) in early June.

After assuming office, the new BSEC chairman pledged to restore investor confidence, attract quality companies to the stock market and transform Bangladesh from a retail-driven frontier market into a transparent, institution-led emerging market.

The BSEC chief also announced plans to conduct a comprehensive review of existing securities regulations, IPO approval procedures and reporting requirements to make the regulatory framework more efficient and business-friendly.

Mr Khan also noted that many large local corporations, multinational companies and state-owned enterprises remain outside the stock market despite being suitable for listing.

"The commission plans to engage with these companies and introduce a direct listing framework to bring quality issuers to the market," the BSEC chief said after taking charge in early June.

The new leadership has raised expectations of stronger regulation, greater transparency and long-awaited structural reforms, encouraging investors to increase their exposure to equities, said a leading merchant banker.

He remained optimistic about the market's outlook for the second half of 2026, expecting the ongoing economic recovery, improving macroeconomic indicators and continued regulatory reforms to provide further support to equities and inclusion of new investors.

However, they noted that new listings and a more accommodating market structure will be needed to give a stronger boost to both the capital market and the broader economy.

The merchant banker said the number of new BO accounts is expected to grow further once fresh listings start to the market.

The BSEC's new commission is working to streamline IPO regulations and introduce a direct listing framework to make the equity market more attractive for fundamentally strong and reputable companies.

"There has been no new listing in the past two years, once the new listing starts, opening of new BO accounts is expected to increase further," he said, adding that many investors open accounts only to apply for IPO shares.

Bangladesh must increase annual foreign direct investment nearly sevenfold to $15 billion by 2030 if it wants to sustain economic growth, finance its massive infrastructure needs and remain competitive after graduating from the least developed country category, the Foreign Investors' Chamber of Commerce and Industry (Ficci) said today (23 July).

Launching its report, "FDI for a New Bangladesh: Roadmap for a $15 Billion Vision", the chamber warned that while Bangladesh possesses many of the fundamentals investors seek, chronic policy uncertainty, bureaucratic delays, weak infrastructure and a fragile financial sector continue to deter fresh foreign investment.

The report was unveiled at the "Ficci FDI Conference 2026: Driving Foreign Investment for Jobs and Prosperity in Bangladesh" at the Bangladesh-China Friendship Conference Centre in Dhaka, attended by Prime Minister Tarique Rahman.

At the programme, the prime minister called upon global investors to become long-term partners in Bangladesh's economic transformation, saying his government is committed to building a $1 trillion economy by 2034 through investment-friendly reforms and private sector-led growth.

In its report, Ficci said stronger FDI is essential not only for achieving the government's economic ambitions but also for financing Bangladesh's estimated $7 billion to $10 billion in annual infrastructure requirements and shifting growth from debt-led expansion to productivity-driven private investment.

Despite being one of South Asia's fastest-growing economies over the past decade, Bangladesh attracts among the lowest levels of foreign investment in the region. The country's FDI-to-GDP ratio stands at just 0.29% to 0.36%, the lowest among five regional peers and only a fraction of Vietnam's 4.23%, the report said.

The report also cautioned that the recent rebound in FDI masks a worrying trend: much of the increase has come from reinvested earnings by existing foreign companies rather than fresh equity investment from new investors, suggesting that current investors are expanding cautiously while new entrants remain hesitant.

"Bangladesh has the potential to attract $15 billion in annual FDI through policy reforms and effective implementation," said Masrur Reaz, chairman of Policy Exchange Bangladesh, while presenting the report. He described the Ficci study as a practical roadmap for unlocking that potential.

Ficci President Rupali Haque Chowdhury said Bangladesh is entering a new stage of economic development in which attracting quality foreign investment will be vital for sustaining growth, creating higher-value jobs and improving global competitiveness.

"The report aims to support evidence-based policymaking and help improve the country's investment climate," she said.

Trade openness matters

The report identifies trade liberalisation as one of the strongest drivers of foreign investment, estimating that every 1% increase in the trade-to-GDP ratio could lift FDI inflows by around 3.7%.

It also argues that reducing logistics costs through better transport infrastructure, ports and supply chains would strengthen export competitiveness and make Bangladesh more attractive to global manufacturers.

However, attracting more investment alone will not be enough.

The report says that every $1 million in greenfield FDI creates only 1.3 jobs in Bangladesh, compared with 6.2 jobs in India, 4.4 in Cambodia and 4.1 in Vietnam. This indicates that foreign investment remains concentrated in capital-intensive sectors such as power rather than labour-intensive manufacturing, technology and higher value-added industries.

Nine structural barriers

Ficci says Bangladesh's weak FDI performance stems from nine structural constraints that have steadily eroded investor confidence.

Policy uncertainty remains one of the biggest obstacles. While official approval procedures are supposed to take around 76 days, investors often wait between six months and a year to receive final clearances.

Institutional fragmentation is another major challenge. Foreign investors currently have to deal with 23 government agencies and nearly 150 separate services, increasing compliance costs and delays.

Infrastructure bottlenecks continue to weigh on investment decisions. The report points to electricity shortages, industrial land constraints and slow land-title transfers in special economic zones.

Logistics remain another weak spot. Cargo dwell time at Chattogram Port averages eight to 10 days, compared with only three to four days in Vietnam, increasing exporters' costs and reducing competitiveness.

The report also flags serious weaknesses in the financial sector, including a 32.26% non-performing loan ratio, low banking sector capital adequacy, a complex tax administration, high effective tax burdens despite relatively moderate statutory tax rates, severe skills shortages and Bangladesh's poor performance in global competitiveness and logistics rankings.

It adds that the growing share of reinvested earnings relative to new equity investment suggests foreign companies are hedging their risks rather than making long-term commitments.

Reform roadmap

To reverse the trend, Ficci proposed a phased reform agenda spanning immediate, medium- and long-term actions.

Among the immediate priorities are introducing a 30-day Bida registration process, a four-day approval window for priority investments and a "deemed approval" mechanism under which applications would automatically be approved if government agencies fail to respond within a specified period.

The chamber also recommends certifying land inside economic zones before marketing it to investors, digitising and consolidating foreign exchange regulations, allowing market-based currency hedging without case-by-case Bangladesh Bank approval, and creating a unified digital single window linking Bida, the NBR, Customs, BSTI and the Bangladesh Food Safety Authority.

The report also recommends requiring 12 months' advance notice before introducing regulations affecting investors and establishing an independent Investment Ombudsman reporting directly to the Prime Minister's Office to resolve investor grievances quickly.

Medium-term reforms include strengthening Bida's institutional capacity, simplifying investment incentives, modernising tax administration, addressing the banking sector's bad loan problem and developing a more skilled workforce.

Over the longer term, Ficci recommends deeper trade integration through free trade agreements, a new national investment law, a five-year FDI strategy, stronger governance of economic zones and a high-level National FDI Coordination Council to oversee implementation.

The report also urges the government to improve Bangladesh's international investment branding and raise its standing in global business and logistics rankings closely monitored by multinational investors.

It concludes that Bangladesh's greatest challenge is not a lack of investment opportunities but a lack of investment competitiveness.

Predictable policies, stronger institutions, modern infrastructure and efficient logistics, it says, could help the country attract $15 billion in annual FDI, create better-quality jobs, diversify exports and sustain growth in the post-LDC era.

PM invites global investors

Speaking at the conference, Prime Minister Tarique Rahman invited local and foreign investors to expand their businesses in Bangladesh, pledging stronger legal protection, simpler regulations and a more business-friendly environment.

"Whether you are a local entrepreneur or a foreign investor, when you invest in Bangladesh, our government will invest in you through our time, support and policies. That is a commitment we will keep," he said.

Addressing foreign investors, business leaders, diplomats and development partners, he said Bangladesh's future depends not only on attracting investment but also on building lasting partnerships.

"I invite every business leader in this room to become part of that future. Together, we can build an economy that is stronger, equitable, and inclusive. I welcome all of you to invest and flourish in Bangladesh.

"Let us grow together, create jobs, and shape Bangladesh. Let us become partners in building a prosperous and globally connected Bangladesh," Tarique said.

The prime minister said the government was committed to building a rules-based, globally connected and private sector-driven economy, adding that Bangladesh's strengths – including its large and growing domestic market, young workforce, strategic location and an elected government with strong public support – position the country for sustained prosperity.

Pakistan has asked the United States for a $10 billion exchange stabilisation facility, according to a source briefed on the matter, which, if approved, could provide a lifeline for the cash-strapped South ​Asian economy.

The request, which is being reported for the first time, follows Pakistan's role in brokering talks over the Iran war, which raised its diplomatic profile and ‌stirred hopes that it could seek economic gains from Washington and other partners.

In the request to US Treasury Secretary Scott Bessent, Islamabad is seeking a Bilateral Exchange Stabilization Support Facility between the US and the Pakistani government worth $10 billion with maturity of up to five years.

The facility, if agreed to, would bolster Pakistan's reserves, ease pressure on the rupee and reduce its reliance on multilateral financing, even as Islamabad undertakes tighter fiscal and monetary policies ​in line with its International Monetary Fund program.

The US Treasury declined to comment on the reported request.

Pakistan's finance ministry did not immediately respond to Reuters' request for comment outside ​of Asia business hours

Pakistani Finance Minister Muhammad Aurangzeb met with Bessent in Washington on Tuesday and said he had raised the vulnerability of the ⁠country's economy to regional geopolitical developments, the ministry said in a statement that did not mention the request.

"Senator Aurangzeb sought greater U.S. support for Pakistan’s road to market, underpinned by improved access ​to international capital markets, higher foreign exchange reserves, and enhanced sovereign credit ratings," it said, adding that both sides reaffirmed their commitment to deepening bilateral economic cooperation, promoting greater US investment, and advancing ​strategic projects.

Pakistan remains under $7 billion IMF discipline that has required politically unpopular tax increases, spending restraint and reforms.

Exchange stabilisation facilities are rare US Treasury backstops, usually routed via the Exchange Stabilization Fund, that provide dollars, swaps or guarantees to support reserves and steady currencies.

These facilities are different from the permanent standing dollar swap lines that the US Federal Reserve has with some major central banks and act as an international supply line of US ​dollars to underpin financial stability.

A 2025 Argentina package was the first new foreign-government exchange stabilisation facility operation since Uruguay in 2002, aside from Mexico's long-standing swap line, dating to the 1940s and ​now sized at $9 billion.

Pakistan narrowly avoided default in 2023 with a $3 billion IMF standby deal and later secured a $7 billion Extended Fund Facility, along with a separate $1.3 billion loan to build up its resilience to ‌climate change and ⁠natural disasters. But its reserves still depend on official financing, rollovers and deposits from China and Saudi Arabia.

That leaves Islamabad exposed to shifts in bilateral support and IMF disbursement delays. That vulnerability was exposed in April when Pakistan repaid about $3.5 billion, one-fifth of its reserves, to the United Arab Emirates with Saudi Arabia providing $3 billion in fresh support.

Pakistan’s central bank said in January that reserves could return to near their 2021 record, reaching $20 billion by the end of 2026.

RECASTING TIES WITH WASHINGTON

A US exchange stabilisation facility would carry weight as both a liquidity backstop and political signal, easing pressure ​on reserves and the Pakistani rupee, while reducing ​the South Asian country's dependence on IMF ⁠tranches and ad hoc rescues.

IMF-backed reforms have stabilised the economy at a political cost, including higher taxes, spending restraint and limited room for development or welfare spending.

Ratings agency Fitch said in April that Pakistan's adherence to its IMF program has supported the country's funding capacity, while rebuilt foreign exchange ​buffers provide a cushion against economic shocks from the Middle East conflict.

But deeper constraints remain. Fitch cautioned that rising energy costs and potential ​supply disruptions could sharply ⁠erode the country's foreign exchange reserves.

Foreign investment in Pakistan has remained thin, deterred by recurring external crises, policy uncertainty, security risks, past profit-repatriation curbs and a narrow export base, while the country's credit rating remains deep in speculative-grade territory, keeping borrowing costs high and market access limited.

Pakistan has sought to use its ties to the Trump administration to address some of these issues, with economic cooperation that has so ⁠far spanned crypto, real estate and mining.

Pakistan has signed a stablecoin agreement for cross-border payments with an affiliate of World Liberty Financial, ​the main crypto business of President Donald Trump's family. It has also pursued a memorandum of understanding to redevelop the closed Pakistan International Airlines-owned Roosevelt Hotel in New York with the US government, and courted US mining investment, including in ​Reko Diq, where the US Export-Import Bank has announced $1.25 billion in financing.
(1 Pakistani rupee = $0.0036)

Commercial banks have asked the Bangladesh Bank to exempt small and medium enterprise (SME) loans from its new 4 percent cap on interest rate spreads, arguing that these loans cost more to manage than other types of lending.

The request came in a recent letter to the BB governor from the Association of Bankers, Bangladesh (ABB), a forum of bank executives.

The central bank, on June 29, instructed banks to keep the weighted average difference between their lending and deposit rates, known as the intermediation spread, within 4 percentage points for all sectors except credit cards and consumer finance. Banks earn money by charging borrowers more interest than they pay depositors. That overall gap is the spread the central bank is now capping.

The BB said it took the decision to ensure that borrowing costs remain reasonable for businesses and productive sectors. As of May, the weighted average deposit rate across the banking sector was 6.22 percent, and the weighted average lending rate was 11.92 percent -- a spread of 5.70 percent, well above the new cap, according to central bank data.

Banks say SME loans are more expensive to manage than other loans, mainly because handling many small loans takes more staff time and paperwork per taka lent than handling fewer, larger loans. That’s why SME loans already carry higher interest rates than most others: currently around 15 to 16 percent, compared with 13 to 14 percent for most other loans. Credit card rates are higher still, which is part of why BB left credit cards out of the cap entirely.

Bank executives have pushed back on the cap more broadly, not just for SMEs.

They argue that BB’s calculation is based on the interest rate banks are supposed to charge, but doesn’t account for how much of that money banks actually collect. A large share of loans are now in default, or have had their repayment terms rescheduled, meaning banks often earn little or nothing from them.

Bank executives recently raised the issue directly with BB Governor Md Mostaqur Rahman, urging that the regulator base the cap on their actual returns, not the rates on paper.

Contacted, Mashrur Arefin, chairman of the ABB, told The Daily Star that a rigid 4 percent spread cap distorts market-based loan pricing, which should reflect the policy rate, liquidity, inflation, borrower risk and operating costs -- not an administrative ceiling.

“It weakens monetary policy transmission, limits banks’ ability to price risk, discourages efficient banks from expanding, and may reduce credit growth,” he said.

Mashrur, who is also the managing director of City Bank, said the cap could also undermine banks’ financial intermediation role, discourage competition, and ultimately slow investment, employment and economic growth. “A more effective way to lower borrowing costs is through lower inflation, lower policy rates and stronger competition.”

He said the effect would hit SMEs hardest, since SME lending already involves higher administrative costs, more risk of default, and more monitoring than lending to large corporations.

A flat 4 percent spread cap makes many SME loans commercially unviable, prompting banks to shift toward lower-risk corporate borrowers, the ABB chairman said, adding that this would restrict formal financing for small businesses, weaken entrepreneurship and job creation, and push many SMEs toward costlier informal lenders -- the opposite of the policy’s intended objective.

The difficulty is already familiar to small business owners. Taslima Miji, an SME entrepreneur, said high interest rates are a major obstacle to her business.

“It is very difficult to run a business by borrowing at such high interest rates. Therefore, lending rates should be reduced. However, we often cannot even obtain loans because of the numerous conditions and stringent requirements imposed by banks,” she said.

In FY25, banks disbursed Tk 2,05,493 crore in SME loans, down by nearly 9 percent from FY24, BB data showed.

Officials of the central bank said overall private sector credit growth is currently low, which is why SME loan disbursement did not pick up.

Besides regular SME loan disbursement, the cottage, micro, small and medium enterprise (CMSME) sector will receive Tk 5,000 crore in low-interest loans under the BB-announced stimulus package to revive the country’s struggling private sector.

A new US tariff targeting Brazil took effect Wednesday, while Washington’s other trading partners brace for a fresh volley of duties as President Donald Trump’s temporary global levies expire this week.

The 25-percent Brazil tariff followed a year-long US investigation, with Washington accusing the Latin American giant of unfair trade practices.This has drawn sharp pushback, although Brazil’s Vice President Geraldo Alckmin told a press conference Tuesday that Brazil will seek to resolve the issue through negotiations instead of retaliating.Various products like beef, coffee and aircraft parts will be exempted from the levy, and roughly half of Brazil’s exports to the United States would remain excluded from the duty, estimates Valentina Sader of the Atlantic Council think tank.Nonetheless, the move comes as Trump makes a renewed push to use tariffs as leverage, sparking fears of retaliation and heightened tensions.Officials could be “using Brazil as an example to send a broader message about its priorities and negotiating approach,” Sader told AFP.

While the US Supreme Court struck down many of Trump’s tariffs in February, dealing a blow to his ability to impose new duties at will, Washington has moved to rebuild his trade agenda using other powers. The United States saying the Brazil tariffs were imposed as President Luiz Inacio Lula da Silva failed to negotiate in good faith also “reinforces the perception that the action is directed not only at Brazil’s trade practices, but also politically at Lula himself,” Sader said.

The duty is becoming a major campaign flashpoint ahead of Brazil’s October presidential elections.

The American Chamber of Commerce for Brazil recently warned that Washington’s measure affects more than $11 billion in exports.

Trump on Tuesday also announced a 100-percent tariff on generic drugs from August 2028, a day after ordering a 50-percent duty on many Canadian goods to take effect in 30 days.

A broader sweep is yet to come, with officials in June proposing tariffs of between 10 percent and 12.5 percent targeting 60 trading partners over alleged failures to act against forced labor.

Analysts widely expect the duties over forced labor to replace the temporary 10-percent global tariff -- expiring Friday -- that Trump imposed after his Supreme Court setback. “We expect to see some action soon,” US Trade Representative Jamieson Greer told CNBC.

Greer added Tuesday that new action over labor concerns will cover a majority of US trade, though it could reignite trade tensions.

The lower 10-percent tariff rate would hit US imports from partners including Canada, the European Union, Mexico, Taiwan and the United Kingdom. They were found to have taken some steps against forced labor.

Goods from over 40 other economies like China, India and Japan face a 12.5 percent levy.

The EU has said that it considers tariffs imposed on these grounds “unjustified.”

A separate tranche of US investigations targeting 16 economies over excess industrial capacity is ongoing, and could lead to further duties.

Washington’s planned 50-percent tariff on Canadian goods comes amid ongoing talks over a North American free trade pact.

Washington recently declined to extend the accord as-is, and Greer is set to travel to Mexico from Wednesday to Friday for discussions linked to a joint review of the US-Mexico-Canada Agreement (USMCA).

US negotiations with Canada have proceeded more slowly.
Google News LinkFor all latest news, follow The Daily Star's Google News channel.

Some lawyers see Trump’s use of an untested legal provision -- Section 338 of the Tariff Act of 1930 -- as a means to gain leverage over Canada in USMCA negotiations.

Canadian Prime Minister Mark Carney said Tuesday that he was looking at “all options,” adding that he and Trump had agreed to “intensify discussions” in upcoming weeks.

Trade lawyer Dave Townsend of Dorsey & Whitney said higher tariffs could be “aimed at encouraging an agreement between Canada and the United States, or in retaliation for the failure to reach such agreement, or both.”

The question, he added, is whether both sides will start a “cycle of escalation and retaliation.”

Samsung has resumed manufacturing operations in Bangladesh after a hiatus of about 18 months, with locally produced smartphones expected to return to the market in January next year.

The restart signals a renewed push in Bangladesh's electronics manufacturing sector, where Samsung was the first global smartphone brand to assemble handsets locally through Fair Electronics.

Production of Samsung refrigerators has already begun at the company's factory in Shibpur, Narsingdi, while washing machine production is scheduled to start in September. Air conditioners, televisions and smartphones are expected to enter production in early 2027.

Bangladesh's large and hard-working workforce, combined with Korean technology and investment, gives the country the potential to become a regional manufacturing hub for Korean companies.
Jijoon Kim | South Korean ambassador to Bangladesh

The South Korean ambassador to Bangladesh, Jijoon Kim, announced the development during his visit to the factory today (22 july). During a visit by South Korean Ambassador Jijoon Kim to the factory today. Samsung Bangladesh Managing Director Jungmin Jung and Fair Group Chairman Ruhul Alam Al Mahbub accompanied him during the tour.

According to Fair Group, it became Samsung's official distribution partner in Bangladesh in 2014, established a local manufacturing facility in 2017 and launched the country's first locally manufactured Samsung smartphones in 2018.

The group has invested around Tk1,000 crore in electronics manufacturing, including about Tk300 crore in smartphone production. The facility has an annual production capacity of around 2.5 million mobile phones.

Fair Group is currently manufacturing products under China's Hisense brand while restarting Samsung production. The company plans to produce around 150,000 refrigerators annually under the two brands by 2027. At present, it manufactures between 40,000 and 50,000 Hisense refrigerators a year.

A visit to the factory showed refrigerators being assembled through automated production lines, with processes ranging from metal body fabrication and component assembly to foam insulation, compressor installation and final quality testing.

Mohammed Mesbah Uddin, chief marketing officer of Fair Group, told TBS that Samsung smartphone production remained suspended from mid-2024 through the end of 2025 as the business environment became challenging following the sharp depreciation of the taka in 2023.

"Effectively, it became very difficult to continue business operations during that period," he said.

He said Fair Group had planned to revamp its operations in 2025, but the process He stated that Fair Group had intended to revamp its operations in 2025, but the process fell short of expectations. as expected. With conditions improving this year, the company has restarted production.

Mesbah said the transition of the market from 4G to 5G devices also required technological upgrades and new machinery, contributing to delays in restarting smartphone production.

While the factory is capable of producing 2.5 million handsets annually, he said the company does not expect to utilise its full capacity in the first year after resuming operations.

Speaking to journalists after touring the facility, Ambassador Kim described Fair Electronics as a successful example of technology transfer, local manufacturing and industrial cooperation between Bangladesh and South Korea.

He said Bangladesh's large and hard-working workforce, combined with Korean technology and investment, gives the country the potential to become a regional manufacturing hub for Korean companies.

Fair Group Chairman Ruhul Alam Al Mahbub urged the government to take stronger action against grey-market and unofficial mobile phone imports, saying a supportive policy environment would accelerate local manufacturing, attract investment, increase government revenue and create jobs.

Samsung Bangladesh Managing Director Jungmin Jung reaffirmed the company's long-term commitment to Bangladesh and its partnership with Fair Electronics in expanding local manufacturing while maintaining Samsung's global quality standards.

The country's worsening gas crisis is putting crores of taka in industrial investment at risk, delaying new projects, disrupting factory operations and increasing financial risks for banks, business leaders, energy experts and policymakers warned yesterday (22 July).

Speaking at the "Energy Security and Transformation of Bangladesh" policy conclave organised by the daily Bonik Barta in Dhaka, participants said prolonged gas shortages have become one of the biggest barriers to investment, while highlighting the need for infrastructure expansion, a diversified energy mix, and greater private sector participation.

They further called for urgent reforms to boost domestic gas production and strengthen long-term energy security.

Trust Bank Managing Director Ahsan Zaman Chowdhury said the gas shortage has left around Tk7,000-8,000 crore in the bank's industrial financing stranded, warning that the crisis could eventually spill over into the banking sector.

"When banks approve industrial loans, the projects already have gas connection approvals from Titas. Entrepreneurs invest their own money, provide guarantees and install machinery, but the projects cannot begin operations because gas is unavailable," he said.

According to him, expensive imported machinery has remained idle for three to four years in many cases, causing national economic losses as equipment gradually deteriorates.

If the projects eventually become loan defaults, the banking sector will also come under severe pressure, he added.

Echoing similar concerns, Meghna Group of Industries Chairman Mostafa Kamal said the gas crisis, combined with administrative bottlenecks, is discouraging new investment and threatening existing industries.

Although the government speaks of improving the ease of doing business, entrepreneurs continue to struggle to secure gas connections, regulatory approvals and infrastructure support, while also having to meet the conditions of foreign lenders, he said.

The MGI chairman noted that the Bangladesh Economic Zones Authority had promised to provide gas, electricity and water to the company's economic zones. Relying on those commitments, the company continued to attract investors, with 15 companies from the US, Europe and China investing there and creating around 12,000 jobs.

However, delayed gas connections have stalled project implementation despite nearly $600 million in financing from the International Finance Corporation (IFC), the World Bank and other international lenders, Mostafa said, adding that unlike domestic banks, foreign lenders offer little flexibility in extending project deadlines, exposing investors to substantial financial risks.

The industrialist, whose group operates 57 factories employing around 65,000 people, warned that prolonged delays in one major project could undermine the viability of several others.

East Coast Group Chairman Azam J Chowdhury said policy unpredictability remains one of the biggest deterrents to investment. While the government talks about "zero duty", procedures at the NBR and Customs remain complicated, he said.

Transcom Group CEO Simeen Rahman said for modern manufacturing, the challenge is no longer just energy availability, but energy reliability and power quality.

"Gas shortages, voltage fluctuations and unplanned interruptions do more than just stop production – they create a wave of uncertainty that destabilises our entire supply chain and inflates operating costs," she said.

Energy expert M Tamim said Bangladesh should pursue a diversified energy mix rather than aim for complete energy independence.

"There is absolutely no chance of becoming fully energy-independent. Our primary goal must be to use renewable energy to reduce our crushing reliance on imports, not to dream of total self-sufficiency," he said, urging greater regional electricity trade and stronger government support for large-scale solar projects.

Former Power Grid Bangladesh chairman M Rezwan Khan, meanwhile, proposed a three-tier electricity tariff structure covering peak, off-peak and super off-peak hours.

"If we raise peak-hour prices but lower them during off-peak times, the average cost remains the same for the government, but it creates a massive incentive for businesses and apartments to replace diesel generators with battery storage," he said.

No new industrial gas connections

Titas Gas Transmission and Distribution PLC Managing Director Shahnewaz Parvez said the company cannot provide new industrial gas connections unless domestic gas production increases or overall supply improves.

More than 500 customers have already deposited money for gas connections after receiving demand notes but remain unable to obtain supplies because of inadequate supply, he said.

Titas distributes about 60% of the country's natural gas and requires around 2,200 million cubic feet per day (mmcfd) to meet demand.

According to Shahnewaz, although at least 1,700 mmcfd is needed to maintain relatively normal operations, Titas is currently receiving only 1,500-1,550 mmcfd.

The situation has worsened after one floating LNG terminal recently went offline, intensifying shortages, particularly in Gazipur's industrial belt, he added.

Neglect in gas exploration

Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmood Tuku attributed the crisis to years of neglect in domestic gas exploration. "About 28,000MW of generation capacity has been built, but no effective initiative was taken to increase domestic gas production. Not a single gas well was drilled over the past 17 years."

He also noted that Bangladesh depends on only two floating LNG terminals, leaving the gas supply system vulnerable whenever one terminal becomes inoperable.

Meanwhile, speaking about the country's power distribution system, the minister said the government wants to privatise power distribution to improve efficiency, accountability and bill collection.

He invited the private sector to submit proposals to take over the country's electricity distribution companies, adding that the prime minister has given consent to move ahead with the initiative.

He also said the government is considering allowing private companies to import petroleum products to encourage competition and reduce the state's role in the sector.

World Bank Country Director for Bangladesh and Bhutan Jean Pesme said Bangladesh's growing reliance on imported fuel and the widening gap between energy supply costs and consumer tariffs are increasing fiscal pressure.

He said around 30% of gas demand, 95% of oil and 90% of coal consumption now depend on imports, exposing the economy to global price volatility and supply disruptions.

According to the World Bank, energy subsidies now account for about 1.1% of GDP, underscoring the need for gradual tariff reforms, expansion of renewable energy, regional power trade and greater private investment in the gas value chain.

Omera Renewable Energy CEO Masudur Rahim said policy inconsistencies were also slowing investment in renewable energy. "Although the government announced zero-duty benefits for solar equipment, importers are not receiving those incentives due to conflicting tax conditions, discouraging rooftop solar expansion despite its significant potential."

Listed non-bank financial institution (NBFI) Union Capital Limited reported a wider loss in the first half of 2026 as lower interest income and weaker recoveries from non-performing and written-off loans weighed on its earnings.

According to the company's unaudited financial statements published on the Dhaka Stock Exchange (DSE) website, its consolidated loss per share (EPS) widened to Tk2.12 for the January-June period, compared with a loss of Tk1.60 in the corresponding period last year.

Despite the weaker financial performance, the company's share price rose 8.70% to Tk5 on the DSE today (22 July).

The company's quarterly performance, however, showed some improvement. For the April-June quarter, Union Capital posted a consolidated loss per share of Tk1.18, down from a loss of Tk1.53 in the same quarter of 2025.

Its operating cash flow also deteriorated during the period. Consolidated net operating cash flow per share (NOCFPS) turned negative at Tk0.18 for the first six months of 2026, compared with a positive Tk0.89 a year earlier, reflecting weaker cash generation from core operations.

Union Capital's financial position weakened further, with its consolidated net asset value (NAV) per share falling to negative Tk67.61 as of 30 June 2026 from negative Tk65.49 at the end of December 2025, indicating a further erosion of shareholders' equity.

The company attributed the weaker earnings to lower recoveries from non-performing loans, which reduced both interest income and provision releases during the first half. Recoveries from previously written-off loans also declined, further hurting profitability.

Union Capital has remained under financial strain for several years due to high levels of default loans, liquidity constraints and sluggish lending. Although it has been working to improve asset quality and strengthen loan recoveries, the latest results suggest limited progress.

Listed on the stock market in 2007, Union Capital provides lease finance, term loans, SME financing, corporate finance and other financial services.

The broader NBFI sector in Bangladesh has been under pressure in recent years amid rising default loans, weak corporate governance, funding shortages and slower business growth, leaving many institutions with mounting losses and deteriorating capital positions.

The Cabinet Committee on Government Purchase (CCGP) on Wednesday approved two procurement proposals worth about Tk 303.16 crore involving the import of muriate of potash (MOP) fertiliser and the purchase of sacks for the Directorate General of Food.

The approval came at a meeting held at the Secretariat with Finance Minister Amir Khosru Mahmud Chowdhury in the chair.

The committee recommended approving a proposal from the Ministry of Agriculture to import 40,000 (±10%) tonnes of MOP fertiliser under the 12th (second optional) lot of a state-level agreement between the Canadian Commercial Corporation (CCC) and the Bangladesh Agricultural Development Corporation (BADC).

The fertiliser will be imported at a total cost of Tk 192.10 crore, with the price fixed at US$388.55 per tonne.

The committee also recommended approving a proposal from the Ministry of Food for the procurement of 1.6 crore sacks, each with a capacity of 30 kg, through 80 packages under the electronic government procurement (e-GP) system for the Directorate General of Food.

The procurement will cost Tk 111.06 crore, with contracts to be awarded to 21 bidders selected across the 80 packages.