Foreign exchange reserves are under strain as commercial banks rely heavily on the central bank’s support due to a weakening reserve position. A combination of slowing remittances, reduced export earnings, and LC constraints on imports has intensified the pressure on reserves, causing them to fall significantly below the IMF’s recommended minimum level.
The central bank, Bangladesh Bank (BB), has been consistently selling US dollars from its reserves to assist banks in meeting their foreign currency obligations. Despite these efforts, the demand for dollars from commercial banks continues to rise.
In FY’23, BB sold a record $13.57 billion to commercial banks, and this trend has continued into the current fiscal year (FY’24). Dollar sales in July, August, and September reached $1.14 billion, $1.15 billion, and $0.97 billion, respectively.
The growing demand for dollars is putting immense pressure on reserves, which have declined rapidly. This situation has raised concerns about the sustainability of the country’s economic stability, as costly dollars are primarily being used to stabilize the exchange rate.
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