$1.32b ACU payment due on Monday
Forex reserve falling on dollar sale as even falling imports cannot decelerate the downturn
The country's reserve will stand at around $34 billion after the $1.32 billion Asian Clearing Union (ACU) payment on Monday next week, according to central bank sources.
Though both the overall import and imports from the Asian countries have been declining gradually since July, according to the central bank data, it fails to put a break on the downturn of the forex reserve – a major economic indicator for a nation.
The country's foreign currency reserve still remains under strain thanks to dollar sales by the central bank for essential imports.
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The ACU payment gateway covers monetary transactions by its member countries for regional imports. The bills are cleared every two months.
The $1.32 billion ACU bill Bangladesh will pay on Monday is for regional imports during the September-October period this year.
The ACU import bill for the May-June period was $1.96 billion, which dropped to $1.75 billion in the July-August period, according to the Bangladesh Bank.
The reserve stood at $35.72 billion on Wednesday after the central bank sold $17 million to state-owned banks for public imports.
The central bank has been selling the greenback from the reserve to stabilise the market. It sold $5.14 billion from reserves in the four months of the current fiscal year, as the dollar sales from the reserve in FY22 totalled record $7.67 billion.
The Bangladesh Bank in FY21 bought around $8 billion from banks due to low imports and high remittance inflows amid the pandemic.
At the beginning of the current fiscal year, remittance inflow provided a brief relief to the fast-depleting reserves. In the first two months of FY23, Bangladesh received more than $4 billion in remittances.
But the remittance flow stumbled subsequently following the uniform dollar rate in September. The country received $1.52 billion remittance in October, which is lowest in the past eight months.
Exports have been facing a downturn in the September-October past two months.
Amid the ongoing dollar crisis, the country's exports have also been declining for the past two months. Exporters fetched the country $4.35 billion in October, which was 7.85% low year-on-year, according to the Export Promotion Bureau (EPB).
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, told The Business Standard that the decline in remittances and export earnings in the last two months appear to be a major concern for the economy.
"The central bank sold more than $5 billion in the last four months. How much will it sell in upcoming months?"
"The government should take the $4.5 billion loan from the International Monetary Fund. Otherwise, the reserve will be at $22 billion – a red-line for any nation," added the economist.
A senior official of the Bangladesh Bank said the central bank is no longer selling dollars from the reserve to private banks. They are selling the greenback only to state-owned banks for essential imports.
Imports falling
Due to the dollar crunch, banks have reduced settlements of Letter of Credits (LCs) for imports. Commercial LC openings fell by 31.16% in September this year compared to the corresponding month of the previous year, according to central bank sources.
In September this year, traders opened LCs for imports worth $5.70 billion – down from $8.28 billion in September 2021.
Import LC opening in June was $8.44 billion in June, which came down to $5.70 billion in September.
According to the Bangladesh Bank, LC opening and LC settlement has been decreasing continuously since June this year.
September also witnessed the gradual decline in LC settlement too.
