Forex reserves slip below $40b for first time in two years

Bangladesh's foreign exchange reserves on Tuesday declined to US$39.77 billion, according to updated data from the central bank.

This is the first time in two years that the reserve dropped below the $40 billion mark. 

The drop has been attributed to Bangladesh Bank's import payments of $1.99 billion last week to the Asian Clearing Union (ACU).

Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of ACU. The central banks of these countries 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 the inward remittance, reports UNB.

Bangladesh's foreign exchange reserves soared to a record amount of $46.15 billion in December last year.

Bangladesh's forex reserves 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 FY22 to $21.03 billion from $24.77 billion in FY21.

Md. Serajul Islam, executive director and spokesperson of BB told UNB that the central bank is selling US dollar to meet huge import payments every day.

He said a fall in inward remittance and rising demand of imports are the reasons for the fall in the foreign exchange reserves.