The country's foreign exchange reserves have crossed the $34 billion mark for the first time in the history – on the back of a good inflow of foreign aid and remittance.
Foreign currency reserves stood at $34.23 billion on June 3, enough to settle the country's import payments for eight months, according to the central bank.
The previous highest reserves of $33.68 billion were recorded on September 5, 2017.
"The foreign exchange reserves have piled up as foreign trade has slowed amid the novel coronavirus pandemic, and the aid from developing partners started arriving," a senior official at the Bangladesh Bank told The Business Standard Wednesday night.
He said remittance is a key driver to raise the reserves to this height.
From July 1, 2019 to June 2 this year, total remittance stood at $16.5 billion, which was 10 percent higher than the amount of same period of the previous fiscal year.
Officials at the central bank said that in 2001, Bangladesh had to delay import payment of Asian Clearing Union (ACU) for insufficient foreign currency reserves. At the end of the 1996-2001 term of the Awami League government, Bangladesh's foreign currency reserves fell to below $1 billion.
Then, after Justice Latifur Rahman took the charge of the caretaker government, the reserves increased slightly.
After 16 years – on June 22, 2017 – the country's foreign currency reserves crossed $33 billion mark for the first time.
Foreign exchange reserves are assets held by a central bank in foreign currencies. These reserves are used to back liabilities and influence monetary policy. It includes any foreign money such as banknotes, deposits, bonds, treasury bills and other government securities held by a central bank.
Md Serajul Islam, executive director and spokesperson of the Bangladesh Bank, told The Business Standard, "With the reserves, we can meet up the country's import payments for eight months."
"An emergency fund of $732 million from the International Monetary Fund has also driven up the reserves," he added.
The reserves have since hovered above $31.5 billion and reached $33.46 billion on Tuesday. The expatriate Bangladeshis remitted $135 million on the first two days of June, after sending more than $1.5 billion in May.
The IMF money was deposited on Wednesday. Exports and imports have both dipped. In April, Bangladesh's export earnings dropped below the remittances received for the first time in its history.
The government has been giving a two percent incentive on remittance this fiscal year. It has also relaxed some rules after the virus crisis set in.
The incentives led to a spike in remittance but inflow began to drop in March as thousands of expatriates returned home due to the global Covid-19 pandemic, which has also left a vast number of the world population jobless.
Still, they sent $1.08 billion in April. Economists warn the amount will shrink further. The expatriates were possibly sending the money from their savings or loans, said researcher Ahsan H Mansur.
Many of the Western and Middle Eastern countries, however, have begun reopening their economies after several months of lockdowns.
During the July-March period, the country's import decreased by 4.81 percent, according to the central bank data.
In the fiscal year 2019-20 – from July 1 to June 4 – the Bangladesh Bank sold $835 million to banks from its foreign currency reserves.
Officials at the central bank said reserves may decreased to below $34 billion soon as there was a payment date of ACU in June.