Bangladesh faces a sharp escalation in inflation and foreign exchange pressure due to the Middle East war, with risks building across dollar market, reserves and external balance, according to the latest Bangladesh Bank assessment.
In its quarterly report for October-December 2025, the central bank used a structural vector autoregression model to simulate the impact of a severe geopolitical shock.
It projected that such a scenario could raise domestic inflation by nearly 2 percentage points and drain more than $6 billion from foreign exchange reserves by the end of 2026.
The report modelled a steep surge in global oil prices, assuming a 70-per cent increase in the first quarter of 2026 and a further 30-per cent rise in the following quarter, alongside a depreciation of the taka.
https://www.newagebd.net/post/economy/296692/war-shock-may-drain-6b-from-reserves-bb
