Commercial banks experienced a drop in foreign currency holdings, with the gross balance falling from $5,970 million in November to $5,559 million in December 2023. The struggle with the dollar crisis has impeded letters of credit payments for banks. Factors contributing to the crisis include a slowdown in remittance and export earnings, a drop in foreign direct investment, and measures by the government and Bangladesh Bank to curb imports.
Despite increased export earnings and remittance inflow in July-December 2023, a 20.94% decline in imports and the central bank’s dollar sales to commercial banks have unintentionally led to a liquidity crisis in the banking sector. The shortage of dollars has resulted in delayed or renegotiated import payments, exacerbating the ongoing crisis.
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