The volume of foreign currencies held by commercial banks in Bangladesh has reached a four-month low in May, reflecting the country’s worsening dollar shortage caused by a decline in remittances and export earnings. The gross foreign currency balance held by banks dropped to $5,120 million, the lowest since January’s $4,849 million. The decline in forex holdings is attributed to reduced foreign direct investment and capital outflows due to ongoing US rate hikes. The government has sought $4.7 billion in loans from the International Monetary Fund to address the dollar shortage, while the central bank has imposed restrictions on luxury imports and taken measures to curb high demand for dollars. However, these efforts have created unintended consequences, including a liquidity crisis in the banking sector. The limited availability of dollars has also caused the value of the local currency, taka, to fluctuate, with the exchange rate against the US dollar rising sharply.
Source for more details:
