Bangladesh’s gross foreign exchange reserve, as per the International Monetary Fund’s guidelines, increased by $384 million in a month, due largely to higher remittance inflows and a halt in the Bangladesh Bank’s dollar sales.
According to BB data, the reserve rose to $19.82 billion on October 9, up from $19.44 billion on September 10.
On September 7, the reserve stood at $20.8 billion but dropped sharply the next day after a $1.37 billion payment to the Asian Clearing Union for import bills covering July and August.
The ACU is a regional settlement mechanism through which payments among participating countries —Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka — are settled via central banks on a net multilateral basis.
After the reserve dipped further to $19.38 billion on September 19, it began to recover.
BB officials said that remittance inflow increased significantly following the August 5 political changes, which contributed most to the recent reserve growth.
Sheikh Hasina resigned as prime minister and fled to India on August 5 amid a student-led mass uprising.
According to Bangladesh Bank data, the remittance inflow rose to $2.40 billion in September compared with that of $1.33 billion in the same month in 2023.
The inflow was $2.22 billion in August 2024.
The BB’s decision to stop selling dollars from its reserve also helped stabilise the reserve.
Instead, the central bank sourced dollars from the interbank market to cover government payments via state-run banks.
However, according to conventional valuation by the Bangladesh Bank, the foreign exchange reserve increased to $24.97 billion on October 9 from $25.50 billion on September 10.
The BB sold about $34 billion from its reserve in the past three financial years, which contributed most to depletion of reserve. The reserve was $48 billion in August 2021.
The Bangladesh Bank adheres to the IMF’s Balance of Payments and International Investment Position Manual, 6th edition (BPM6), for calculating both the gross international reserve (GIR) and the net international reserve (NIR).
The Bangladeshi taka weakened against the US dollar, reaching Tk 120 for a dollar, driven by a dollar shortage and a pressure on banks to settle import payments.
The exchange rate per dollar was Tk 84.81 in June 2021, Tk 93.45 in June 2022 and Tk 106 in June 2023.
This ongoing dollar crisis has significantly impacted banks’ ability to settle import payments and open letters of credit, creating challenges for businesses.
