Forex reserves rebound to $21b, propelled by export, remittance

Rising inflow of remittances and export receipts largely prop up Bangladesh's foreign-exchange reserves with the figure crossing the US$21-billion mark set in IMF arithmetic on the country's macroeconomic parameter.

A sustained growth in export earnings also helped out. The country's export earnings in the first seven months (July-January) of the fiscal year (FY'25) increased by 11.68 per cent to $28.97billion, according to the data of the Export Promotion Bureau (EPB). Exports fetched $25.94 billion during the same period of time last fiscal (FY'24).

Apart from increased remittance netting, the central bank's current decision not to sell foreign currencies, the American greenback in particular, from its stock to commercial banks to facilitate the lenders to meet their overseas payments against imports helps in stopping forex bleeding, officials and bankers said.

According to the data with Bangladesh Bank (BB), the central bank, the country received remittances worth around $2.38 billion in the first 26 days of this February, nearly $200 million higher from the remittance receipts in the 31-day-long month of January 2025.

On the other hand, the banking regulator as part of its reserve-boosting move skipped selling the US dollar on the market. The BB in the last fiscal year (FY'24) sold $12.80 billion on the market but it sold only $1.10 billion until February 26th of this current financial year (FY'25).

The prudence pays off: the volume in the country's forex reverses continues rising to reach $21.08 billion in BPM6 calculation prescribed by the International Monetary Fund or IMF and $26.26 billion in BB count as on February 26, 2025, according to the data.

Even three days ago, the cumulative reserves size was below $21 billion in accordance with the calculation by the Bretton Woods institution.

Seeking anonymity, a BB official says they have been observing a significant rise in inward-remittance flow in recent weeks, bolstering the reserves stock.

"The way it (remittance flow) is growing, it could cross $2.50 billion this month. We're expecting more remittance in next month ahead of Eid-ul-Fitr," the official says.

Not only the remittance uptrend, the central banker says, the BB's decision not to sell dollars from the reserve contributes to preventing the forex depletion as the central bank did not sell anything from the reserves so far this month.

While briefing reporters to share latest data of classified loans in banks on Wednesday, BB Governor Dr Ahsan H. Mansur said the forex reserves kept rising gradually in recent times.

In accordance with the BPM6 calculation, he said, the reserves reached close to four months' import costs of the country, which was the target of the IMF. In terms of BB calculation, the reserves size is equivalent to over four months' import expenses.

Former lead economist of World Bank's Dhaka office Dr Zahid Hossain says the reserves dropped every two months after ACU (Asian Clearing Union) payment and that they have been observing some types of stability in the low level of the reserves for the last few months, which is good.

"But the puzzling matter is there are some allegations in the market that the regulatory policy is being tilted to state-owned commercial banks as far as exchange rates are concerned," he said.

"If the central bank is really in comfortable position, then why the dual policy is in place?" the noted economist questioned.

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