Bangladesh's trade deficit in July narrowed significantly, by 92% year-on-year, thanks to increased inflows of remittances and a rebound in export earnings.
The Bangladesh Bank's data shows the country's trade deficit stood at $86 million in the first month of the current fiscal year, which was $1 billion in the same period of the last year.
The decline in the trade deficit has helped to improve the country's current account balance, giving the Bangladesh Bank comfort in managing the foreign exchange market.
The current account balance turned into surplus to around $2 billion in July, which was negative $108 million in the same month last year.
The Bangladesh Bank in its latest monetary policy for the current fiscal year anticipated a further deterioration of the current account balance in the near future due to negative export earnings and job losses among Bangladeshi migrant workers.
However, a rise in inward remittances has proved the prediction weak, making the central bank's foreign exchange reserves stronger even amid the pandemic.
Remittance inflows continued their incredible run in August, with migrant workers sending home about $2 billion. The amount of remittances received last month was 35.2 percent higher compared to that of the same period a year ago, according to the Bangladesh Bank.
When the novel coronavirus pandemic took root, remittances–one of the masts of the Bangladesh economy–were primed to take a pounding. But the reality turned out to be vastly different.
The other source of foreign currency earnings, exports, also rebounded amid the reopening of the global market after long novel coronavirus-induced lockdowns.
The country's apparel exports saw a big jump with about 51 percent growth during the first 19 days of August, compared to that of the same period last year.
With the surge in remittance inflows, lower imports, and an injection of budget support from external sources, the country's foreign exchange reserves crossed the $39 billion mark for the first time and recorded at $39.4 billion on Tuesday.
With the surge in remittance inflows, lower imports, and the injection of budget support from external sources, the country's foreign exchange reserves crossed the $39 billion mark for the first time and recorded at $39.4 billion on Tuesday (September 1).