The Financial Express

Forex reserve slips below $32 billion

| Updated: March 09, 2018 20:50:29

Reuters file photo. Reuters file photo.

Country's foreign exchange reserves slipped below US$ 32 billion after more than two months due to highest-ever import payments settled bi-monthly with Asian Clearing Union (ACU).

It paid $1.56 billion to the ACU against January-February imports from the member countries, particularly India, according to the central bank's latest statistics.

The fund has already been remitted to the ACU headquarters in Tehran.

After the payment, the forex reserves came down to $31.93 billion on Thursday from $33.49 billion of the previous working day and $31.999 billion on January 04 after settlement of import bills for November-December period last calendar year.

The reserves would, however, be enough to settle more than seven months of the country's total import bills.

The amount of ACU payment rose by 34.16 per cent or $398 million in the latest transaction from $1.16 billion earlier, mainly due to higher imports of rice, officials said.

"Rice imports from India have pushed up the overall import payment under the ACU arrangement," a senior official at Bangladesh Bank (BB) told the FE.

He pointed out that Bangladesh also started importing different consumer items, cotton, raw materials and capital machinery from the ACU member countries, particularly from India.

The BB is providing foreign-currency support to the commercial banks continuously for clearing the import bills of the essential items, which might put pressure on the reserves if such operation continues.

The central bank sold $27 million to four commercial banks at market rate on Thursday to meet their growing demands for the greenback.

It resumed providing the forex backup in the recent months to the banks directly, aimed at keeping the market stable.

A total of $1.56 billion had been sold since July 01 of the current fiscal year (FY), according to BB's latest data.

The central bank might continue with the support commensurate with the market demand, the BB official hinted.

The ACU is an arrangement involving Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan, Sri Lanka and the Maldives, through which intra-regional transactions among the participating central banks are settled on a multilateral basis.

The union started its operation in November 1975 to boost trade among the member countries. Bangladesh and Myanmar joined the union as the sixth and seventh members in 1976 and 1977 respectively. Bhutan joined the ACU in December 1999 and the Maldives in January 2010.

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