Bangladesh’s foreign exchange reserves dropped below $40 billion on Tuesday for the first time in two years.
The reserves dropped to $39.77 billion after the country’s central bank cleared $1.99 billion as import payments to the Asian Clearing Union (ACU) last week.
The central banks of ACU member countries – Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka – have to make the payments every two months.
The reserves have been under stress for the past couple of months due to a surge in the import bills and a drop in inward remittance.
The Bangladesh Bank has been selling dollars from the reserves almost every day to control the ongoing situation. It is also providing this support in LC settlements mainly for food products, fuel and government procurement. In FY22, the central bank sold $7.62 billion from the reserve.
The Bangladesh Bank has been devaluing Taka against the dollar to reduce imports and encourage exports. The central bank is currently selling dollars at $93.45, which was $84.80 a year ago.
Bangladesh’s foreign exchange reserves soared to a record amount of $46.15 billion in December last year and witnessed a fall as import volume in the fiscal year 2021-22 increased to about $78 billion, while foreign exchange gained from remittance and export stood at $73 billion.
The export earnings in FY22 amounted to $52.08 billion and inward remittances $21.03 billion. The inward remittance shows a fall in the FY22 to $21.03 billion from $24.77 billion in FY21.