As the holy Eid-ul-Fitr approached, Bangladesh`s foreign currency reserves witnessed a robust surge, bolstered by strong remittance inflows and a slight increase in export earnings. The country`s reserves now stand at over $20 billion, with gross reserves reaching $25.73 billion.
Central Bank data reveals that by the end of last month (March 27), reserves were recorded at $2,481 million, with BPM-6 at $1,945 million, totaling $19.96 billion. By April 8, gross reserves climbed to $2,538 million, with BPM-6 rising to $2,100 million, marking significant growth since 2016.
However, reports indicate that Bangladesh`s expendable real reserves hover around $15 billion, posing challenges in meeting three months` worth of import expenses, estimated at approximately $6 billion per month. The country falls short of the minimum requirement of reserves equivalent to three months` import costs, signaling a concerning economic indicator.
Central Bank officials attribute the reserve growth to heightened remittance inflows ahead of Eid and increased export activity. Foreign exchange reserves are primarily augmented by remittances, export earnings, foreign investments, and loans from international sources. Conversely, reserves are depleted by import expenditures, loan payments, and other foreign currency outflows.
Despite the surge in reserves, challenges persist due to elevated global fuel and commodity prices, coupled with lingering disruptions in global trade post-COVID-19. The ongoing Russia-Ukraine conflict has exacerbated the country`s dollar crisis, intensifying pressure on reserves.
To mitigate market instability, the central bank has been selling dollars from reserves regularly. In the current fiscal year 2023-24, the bank has sold $7.6 billion, while also purchasing $1 billion from commercial banks. In the previous fiscal year, the bank sold $13.58 billion to various banks, reflecting efforts to stabilize the currency market amidst economic uncertainties.
