Commercial banks reported a significant boost in foreign exchange balances, reaching a 19-month high of $5.53 billion in June. This surge is credited to lower imports and higher export and remittance earnings, according to data released by the central bank.
The latest figure surpasses the previous high of $5.58 billion recorded in November of the previous year, demonstrating the country’s resilient economic performance amidst global uncertainties.
During the fiscal year 2022-2023, June’s forex holdings saw an impressive 6.23 percent increase from $5.21 billion at the end of the previous financial year. Additionally, June’s balance also experienced an 8 percent rise from May this year when it stood at $5.12 billion.
Economists and financial experts attribute the rise in forex reserves to Bangladesh’s positive performance in the export and remittance sectors, which have been instrumental in driving the nation’s economic growth. Notably, merchandise shipment earnings witnessed robust growth of 6.67 percent, reaching $55.55 billion in fiscal year 2022-2023. Simultaneously, remittance inflows also increased by 2.75 percent, totaling $21.61 billion during the same period.
The decline in imports, which fell by 14.15 percent to $69.97 billion in the July-May period of the fiscal year 2022-2023, further contributed to bolstering the forex reserves held by commercial banks.
While the surge in forex reserves is seen as a positive indicator of the country’s economic health, there are ongoing concerns about the scarcity of US dollars, according to Syed Mahbubur Rahman, managing director of Mutual Trust Bank Limited. Despite the increase in forex holdings, challenges related to the availability of US dollars persist, impacting the opening of Letters of Credit (LCs) in line with demand.
The outstanding forex reserves in Bangladesh’s banking sector were $4.58 billion in 2019-20, followed by $5.52 billion in 2020-21, and $5.2 billion in 2021-22, as per data from the Bangladesh Bank.
As the global economy faces turmoil, Bangladesh’s overall gross foreign exchange reserves declined from $41.82 billion in FY22 to $31.20 billion at the end of FY23. However, it’s worth noting that the central bank recently introduced new reporting standards based on the International Monetary Fund’s balance of payments and investment position manual, aiming to provide accurate and transparent reporting of the country’s dollar stockpile. As of July 12, the gross international reserves stood at $23.58 billion, declining to $23.45 billion on July 19.
With the positive trend in export and remittance earnings, Bangladesh’s economy showcases resilience amidst global challenges. However, careful management of forex reserves remains essential to effectively tackle currency scarcity.