Forex reserves slip below $20 billion again

Bangladesh's foreign exchange reserves fell below $20 billion as the remittance growth rate has dulled recently, the central bank said in a report.

At the end of Thursday (18 April), foreign exchange reserves stood at $19.89 billion dollars, the Bangladesh Bank said in a report. Reserves at the end of last week were $20.10 billion.

More money is now coming through hundi, an informal cross-border money-transfer system that bypasses the legal banking system, channels as official banking channels are paying less for dollars.

"The remittance dollar rate in the country's banking channels decreased during Ramadan [March] compared to the previous year. Besides, remittances inflow has slowed down in the first two weeks of this month," the head of the treasury department of a private bank told The Business Standard on condition of anonymity.

The bank official said, "Banks paid Tk118-120 per remittance dollar in late February. However, banks were buying remittance dollars at Tk113-114 after the price fell in mid-March. As the price fell in the banking channels, Hundi agents have used this as an opportunity to increase remittance collection, resulting in a reduced remittance inflow through official channels. This, in turn, is causing reserves to fall."

Earlier in March, Bangladesh's foreign exchange reserves fell below $20 billion after clearing the import bills of $1.29 billion with the Asian Clearing Union (ACU). 

The ACU payments for January and February were cleared on the first week of March, TBS reported on 10 March, citing an official of the Bangladesh Bank.

According to the central bank, foreign exchange reserves stood at $19.99 billion on 7 March, which was $21.15 billion the previous day.

The forex reserves peaked at over $48 billion in August 2021.