Bangladesh in better positition to handle the current FX crisis than Sri Lanka or Pakistan

With the introduction of prohibitive levies to preserve Bangladesh's depleting foreign exchange reserves, imports of 135 products fell 52% in volume and 41% in value during the last nine months. According to official figures, the government's income from these imports, which are considered less crucial and non-essential at this time of global crisis, decreased significantly as well. In the eyes of economists, the market demand for some of the products, whose prices have skyrocketed for import against 100% LC margin, stands out as a sign of income disparity in society.

The amount of foreign currency held by the country's commercial banks increased to a 14-month high in February as a result of increased remittance and export profits as well as import restrictions. From $4,849.28 million in January, the gross foreign currency balance with banks increased to $5,240 million in February. According to data from Bangladesh Bank (BB), the gross holding of foreign exchange by banks climbed for four straight months, reaching $4,708 million in December, $4,708 million in November, and $4,505 million in October.

Bangladesh Bank is going to implement the BPM6 method in the calculation of foreign currency circulation from next June; It will be officially announced in the monetary policy for the second half of the year in June. Bangladesh took the decision to implement the International Monetary Fund (IMF) accounting system BPM6 after receiving the first installment, as a part of fulfilling the requirement for the loan.

Following the central bank's $1.05 billion settlement of import bills with many Asian nations, Bangladesh's foreign exchange reserves fell to a six-year low of $31.15 billion, according to official data. As a result, the reserves are down around 30% from the $44.14 billion recorded in March last year. The reserves are at their lowest level since the 2016–17 fiscal year when they were at $33.49 billion. 

In order to meet performance standards specified by the International Monetary Fund (IMF) and receive the second tranche of the $4.7 billion loan package, the Bangladesh Bank must rebuild its foreign exchange reserves by more than $3 billion in four months, or by June. The Bangladesh Bank has pledged to expand its net reserve to four months' worth of potential imports by FY26 through prudent aggregate demand management policies, more flexible currency rates, and structural reforms.

Due to excessive reliance on imports and a lack of domestic production of goods and raw materials, Bangladesh is currently experiencing a financial crisis that is straining its foreign exchange reserves. As the conflict between Russia and Ukraine broke out in February of last year, commodity prices rose and Bangladesh's import costs for FY22 increased to $82.49 billion, a 36% increase over the previous year. Nonetheless, imports have decreased dramatically this year, and some commodity prices are falling.