Bangladesh’s foreign exchange reserves is falling due to meeting import demand of essential goods and a downward trend in remittance-export incomes, the latest data of Bangladesh Bank (BB) revealed.
After paying $1.35 billion to Asian Clearing Union (ACU) as an import bill for September-October, and $131 million spent to meet LC liabilities, the forex reserves stood at $34.3 billion at the end of November 7.
BB spokesperson Md Abul Kalam Azad told UNB that the liabilities of import payment are decreasing gradually after reining in opening of import LCs.
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US $1.35 billion in ACU bill has been paid in September-October. Earlier, Bangladesh had to pay $1.73 billion for July-August period and $1.96 billion during May-June, he said.
The central banks and the monetary authorities of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are currently members of the ACU.
According to the suggestion of International Monetary Fund (IMF), if $8 billion used as export development fund is excluded from the foreign exchange reserves, then the reserves stand at $26.3 billion. It is the lowest in 7 years. Forex reserves were $35.8 billion on October 30, 2022.
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Bangladesh’s foreign exchange reserves reached an all-time high of $48.06 billion in August 2021 and a record low of $42.5 million in August 1974.
Despite curbing imports, the foreign exchange reserves are falling sharply.
Opening of new LCs has been reduced. But the liability of the previously opened LCs is now payable in terms of arrears or late payment. Due to this, the dollar crisis is becoming more acute.
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Bangladesh will be able to meet the import expenses of three and a half months with the current forex reserves.
Regarding the tightening of imports, economists said that forex reserves cannot be increased by stopping imports. Domestic products need some imported materials. If not, the economy will be adversely affected.
Former BB governor Dr. Salehuddin Ahmed told UNB that declining reserves are a major challenge for the economy.
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“Now we have to think about how to meet this challenge. First, we need to emphasize increasing remittances. Dollar rates should be left to the market,” he said.
Banks in Bangladesh will buy dollars at the required rate. It does not matter whether it is Tk 112 or more. It is important to raise remittance now, former governor of Bangladesh Bank Dr. Salehuddin said.