Thursday, 21 November, 2024
Bangladesh's foreign reserves have surpassed the $20 billion mark once again after a two-month dip, though this surge may be short-lived due to an upcoming payment for the Asian Clearing Union (ACU) bill, which is expected to reduce the reserves.
As of Thursday, a Bangladesh Bank report shows that the country’s reserves have reached $20 billion under the BPM6 accounting method. This marks the first time since September 4 that reserves have rebounded to this level.
The last reserve data from the central bank, published just days before the fall of the Awami League government, showed reserves at $20.48 billion on July 30, with a similar figure recorded on August 21. However, following the payment of the ACU bill for imports, reserves fell to $19.44 billion on September 12.
As of October’s end, reserves stood at $19.87 billion, reflecting a $130 million increase in just one week, with $19.80 billion recorded on October 23, showing a $70 million rise during that week.
Hosne Ara Shikha, spokesperson and Executive Director of Bangladesh Bank, attributed the increase in reserves primarily to the rise in remittance inflows. “However, remittances do not directly contribute to reserves,” she clarified.
For three consecutive months, remittances have exceeded $2 billion—$2.32 billion in August, $2.40 billion in September, and $2.39 billion in October. While these funds enter the banking system, they are sold in the interbank market or to Bangladesh Bank, not directly adding to reserves.
Another Bangladesh Bank official explained that the rise in reserves was also due to a decrease in the opening of letters of credit (LCs) for imports, which has reduced the demand for dollars in the banking system. With increased remittance inflows and a reduction in import demand, reserves have grown.
The first quarter of the current fiscal year (July-September) saw a drop in LC activity. The value of LCs opened for imports decreased by 8.58%, and the settlement of LCs fell by 17.57% compared to the same period last year. Import of capital machinery also saw a significant decline, falling by over 41%—with only $380 million worth of capital machinery imported in the three months, compared to $650 million in the same period in 2023.
According to the IMF’s BPM-6 methodology, Bangladesh’s gross reserves currently stand at $25.72 billion after accounting for short-term liabilities. This reserve data has been published since July 2023, following the approval of the IMF loan.
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Bangladesh's foreign reserves have surpassed the $20 billion mark once again after a two-month dip, though this surge may be short-lived due to an upcoming payment for the Asian Clearing Union (ACU) bill, which is expected to reduce the reserves.
As of Thursday, a Bangladesh Bank report shows that the country’s reserves have reached $20 billion under the BPM6 accounting method. This marks the first time since September 4 that reserves have rebounded to this level.
The last reserve data from the central bank, published just days before the fall of the Awami League government, showed reserves at $20.48 billion on July 30, with a similar figure recorded on August 21. However, following the payment of the ACU bill for imports, reserves fell to $19.44 billion on September 12.
As of October’s end, reserves stood at $19.87 billion, reflecting a $130 million increase in just one week, with $19.80 billion recorded on October 23, showing a $70 million rise during that week.
Hosne Ara Shikha, spokesperson and Executive Director of Bangladesh Bank, attributed the increase in reserves primarily to the rise in remittance inflows. “However, remittances do not directly contribute to reserves,” she clarified.
For three consecutive months, remittances have exceeded $2 billion—$2.32 billion in August, $2.40 billion in September, and $2.39 billion in October. While these funds enter the banking system, they are sold in the interbank market or to Bangladesh Bank, not directly adding to reserves.
Another Bangladesh Bank official explained that the rise in reserves was also due to a decrease in the opening of letters of credit (LCs) for imports, which has reduced the demand for dollars in the banking system. With increased remittance inflows and a reduction in import demand, reserves have grown.
The first quarter of the current fiscal year (July-September) saw a drop in LC activity. The value of LCs opened for imports decreased by 8.58%, and the settlement of LCs fell by 17.57% compared to the same period last year. Import of capital machinery also saw a significant decline, falling by over 41%—with only $380 million worth of capital machinery imported in the three months, compared to $650 million in the same period in 2023.
According to the IMF’s BPM-6 methodology, Bangladesh’s gross reserves currently stand at $25.72 billion after accounting for short-term liabilities. This reserve data has been published since July 2023, following the approval of the IMF loan.
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