Forex reserve falls to $37 billion

Amid the ongoing dollar crisis, Bangladesh's foreign exchange reserves have further declined to $37 billion.

Reserves have fallen to this level after paying off $1.73 billion to Asian Clearing Union (ACU). 

At the end of Thursday (8 September), reserves stood at $37.06 billion; on Wednesday (7 September) it was $38.94 billion.

However, if the reserves are calculated excluding the money given to various funds including the Export Development Fund loan, the usable reserves of the country are now $30 billion.

Meanwhile, the trade deficit at the end of the outgoing 2021-22 fiscal year stood at $33.25 billion. Which is the highest in the history of the country. At the same time, the deficit in the current account balance of foreign transactions also exceeded $18.5 billion.

The Bangladesh Bank faces a huge deficit, having to sell $7.6 billion to banks in the outgoing fiscal year. Besides, it is selling more than $2.7 billion so far in the current financial year.

Import expenditure has been higher than the export income of the country and due to a decrease in remittances, there has been a huge shortage of dollars in the last financial year.

According to statistics, exports increased by 33.45% during July to June of the previous financial year. On the other hand, imports increased by 35.95% . Bangladesh earned $49.25 billion from exports during the period.

However, during the same period, the cost of imports was $82. 50 billion. Remittances fell by more than 15%. This led to a decrease in reserves which created a dollar crisis.

According to the Bangladesh Bank, the country's foreign exchange reserves crossed the $37 billion mark on 28 July, 2020. It rose to $48.06 billion in August 2021. However, the central bank has been forced to sell dollars from the reserves as import costs have increased and expatriate income has decreased.

The central bank sold $80 million to banks on Thursday (8 September). So far this fiscal year, the Bangladesh Bank has sold $2.76 billion to banks.

ACU is an international transaction settlement system. Through this, transactions between Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are settled. ACU is headquartered in Tehran, the capital of Iran. In this arrangement, the central bank of the participating countries pays the import amount every two months.

The Bangladesh Bank paid off its July-August period debt of $1.73 billion to the ACU on Wednesday and adjusted the forex reserves on Thursday.

Bangladesh's forex reserves fell below $40 billion on 12 July this year after paying $1.96 billion to the ACU. 

Earlier this year, on 10 May  $2.24 billion were paid to the ACU; Bangladesh's forex reserves fell to $41.95 billion then.