Commerical banks boast upswing in forex holdings despite big outgoings

Commercial banks boast an upswing in their foreign-exchange holdings despite rises in import orders and settlements mainly as record remittance inflows coupled with steady export-receipt growth help out, sources said.

Economists also see some curbs on leaks of foreign exchange through illegitimate transfers through hundi and trade-based money laundering as a factor behind such little affluence against the backdrop of dollar crunch in particular.

Such rise in foreign currencies, the American greenback in particular, gives some respite to the $460-billion-plus economy that faced multipronged macroeconomic strains in recent times because of quick depletion of foreign-exchange reserves, officials and bankers say.

At the end of December 2024, gross foreign exchange held by commercial banks stood at $4.26 billion. Since then, the figure has been on an upturn to reach $4.54 billion in January 2025.

The upturn in forex holdings of the commercial lenders continues, standing at $4.63 billion and $5.11 billion in February and March respectively, according to the latest statistics available with Bangladesh Bank (BB), the country's central bank.

Speaking on condition of anonymity, a BB official said the gross forex stock in the banking sector showed a steady growth in recent months mainly because of record inflows of remittance thanks to a stable exchange rate.

"Simultaneously," the central banker says, "the country saw an over 10-percent growth in export receipts, which also contributed to the sharp rise in banks' foreign-currency earnings."

In March last, according to the BB data, the country received the highest monthly inflow of remittance in its history as Bangladeshi citizens working abroad sent remittances equivalent to $3.29 billion, a nearly 65- percent jump from the $1.99 billion that came in the same month a year earlier, driven by the celebration of Eid-ul-Fitr festival.

Inward remittances were $2.53 billion in February this year, the data showed.

Moreover, the inflow of remittances during the July-March period of the current fiscal year grew by more than 27 per cent to $21.78 billion from $17.07 billion in the same period of FY24.

In terms of export, the country registered a 10.52-percent increase in export earnings with $37.19 billion bagged in the first nine months of the FY'25 from $33.65 billion earned during the corresponding period of the last fiscal (FY'24).

Talking to the FE, managing director and chief executive officer of Mutual Trust Bank (MTB) PLC Syed Mahbubur Rahman has said the banking industry has been receiving huge volumes of remittance in recent months while export growth is also encouraging.

At the same time, he says, banks started receiving overseas funds under buyer's-credit arrangements in recent times, improving the stock of forex with the banks.

"And the rising forex stock helps bank efficiently deal with import orders that started picking up," the experienced banker adds. Meanwhile, the actual import in terms of settlement of letters of credit (LCs) grew by 4.07 per cent to US$45.99 billion during the July-February period of the current fiscal year (FY), 2024-25, from $44.19 billion in the same period of the previous fiscal year.

On the other hand, the opening of fresh LCs, generally known as import orders, rose by 4.62 per cent to $47.28 billion in the first eight months of this fiscal from $45.19 billion in the same period of FY'24.

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