Following recent payments made through the Asian Clearing Union (ACU) in March and April, Bangladesh Bank’s foreign exchange reserves have experienced a notable decline, falling below the $13 billion mark. As per the BPM6 method of the International Monetary Fund (IMF), the total forex reserves now stand at $23.77 billion, marking a significant drop from $18.32 billion.
Under IMF guidelines, Bangladesh’s net forex reserves have dwindled to $13.76 billion, with gross reserves hitting $18.26 billion, reaching a 10-year low, according to the latest data released by Bangladesh Bank on May 12.
The deficit in the country’s financial account has also surged, reaching $9.25 billion, more than three times higher than the deficit recorded in the same period of FY23.
The current volume marks the lowest point since January 2014 when reserves stood at $18.11 billion. Data reveals that gross foreign exchange reserves slid to this level from $19.97 billion on April 30 and $21.86 billion on December 28, 2023.
The reserves faced further depletion in May due to import payments of $1.63 billion made to the Asian Clearing Union (ACU) for March and April.
Bangladesh Bank’s conventional valuation indicates a drop in foreign exchange reserves to $23.71 billion on May 12 from $25.36 billion on April 30.
The central bank’s continuous sale of dollars to commercial banks has exacerbated the shortage of dollars in the market, contributing to the depletion of foreign exchange reserves. Over the past 34 months, the central bank has sold more than $32 billion to commercial banks.
The financial account, comprising foreign direct investment, loans, aid, and trade credit, has remained negative for the past two years. This deficit has led to direct foreign payments from reserves, with trade credit witnessing a negative balance of $12.2 billion in July-March of FY24, indicating slow export repatriation.
Despite negative inflows in short-term loans, foreign loan payments have increased, exacerbating the expanding deficit in the financial account.
The latest data underscores the challenges faced by Bangladesh in maintaining stable forex reserves amidst ongoing economic pressures and trade dynamics.
