Special Correspondent:
Bangladesh’s foreign-exchange reserves stand just over US$ 31 billion following the central bank’s latest payment of US$1.05 billion to the Asian Clearing Union (ACU) against import bills, officials said.
On Tuesday last, it dropped to US$31.147 billion – the lowest level since January 2017.Before the bi-monthly payment, the forex reserves were more than $32.221 billion recorded on March 06, 2023, according to the Bangladesh Bank (BB) data.The significant fall in the reserves, particularly the greenback, comes as a matter of concern for the economy which is under stress, dragged by higher import payments.The ACU is an arrangement by which the member countries settle payments for intra-regional transactions among the participating central banks on a net basis.Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the Tehran-headquartered ACU. The member-countries of the union clear their payments every two months.Seeking anonymity, a BB official confirmed the ACU payment, saying that the forex reserves continued to shrink because of the gradual increase in selling US dollars from the BB to the banks suffering from forex dearth to settle their overseas transactions.He said the BB sold more than US$ 10 billion to the commercial banks so far in the current fiscal year (FY ’23) and the trend might continue up to the month of Ramadan as the central bank does not want the commercial banks to struggle opening LCs (letter of credits) to facilitate imports of key Ramadan items.However, he said, the export earnings and remittance inflows were increasing for the last few months. “We’re expecting that the inflow of remittance will largely increase in the next few months as we’ve two Eid festivals ahead.”When contacted, professor of Independent University, Bangladesh M. A. Taslim said the continuous fall in reserves is not a good sign though it is still remaining above the danger level.”But the problem is that we don’t know the actual size of the reserve. The BB should release the real data,” he said.As part of its austerity measure, the economist said, the import restrictions have helped narrow the current account deficit.”It’s a good sign,” he said, pointing out downside risks that the measure badly affected the imports of raw materials and capital machinery as well as industrial production, employment and growth.He suggested devising a long-term plan to boost supply of foreign currencies.The gross forex reserves reached a record high of $48 billion in August 2021 since when the BB started injecting the greenback into the forex market as the banks began facing its shortages due to growing import payments, triggered by the economic recovery from the Covid-19 crisis.The forex crisis intensified a few months later with the start of the Russia-Ukraine war in February 2022, further disrupting the global supply chain.

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