Cenbank buys another $353m, raises total purchase to $1.7b in two months

Highlights:

• Lower import easing pressure on exchange rate
• Overdue import bills dip with strong remittance, export inflows
• FY25 import LCs rose only 7.24%
• Capital machinery imports fell 25.4% and intermediate goods 6.3%
• July 2025 private sector credit growth was 6.52%
• Public sector borrowing grew 14.5%
• Reserves at $25.67b as of 14 September 2025

The Bangladesh Bank has bought more than $1.7 billion from commercial banks in the past two months, including $353 million today (15 September), as it seeks to stabilise the exchange rate and support remittance and export flows.

The central bank began dollar auctions on 13 July and has since been actively purchasing foreign currency to manage market liquidity.

"Today, $353 million has been bought from 26 banks with exchange rates ranging between Tk121 and Tk121.75 under the Multiple Price Auction method," a senior Bangladesh Bank official told The Business Standard.

Earlier, on 9 September, the central bank purchased $265 million from banks through another auction with a cut-off rate of Tk121.70.

According to a deputy managing director of a private bank, a year of strong remittance and export inflows has allowed banks to clear overdue import bills, especially for fuel. Now, with reduced import pressure, dollar supply is exceeding demand, which is pushing down the exchange rate.

Central bank figures show that in the 2024-25 financial year, total import letters of credit (LCs) opened amounted to $69.01 billion, up only 7.24% from the previous year.

Although overall imports have risen, the opening and settlement of LCs for capital machinery, a key indicator of industrial expansion and job creation, has fallen. Banks opened capital machinery import LCs worth $1.74 billion in FY25, down 25.41% from the previous year.

Similarly, LC openings for intermediate goods in FY25 fell to $4.31 billion, a 6.26% decline year-on-year.

Credit growth remains weak

According to Bangladesh Bank data, private sector credit growth in July 2025 stood at 6.52%, compared with 6.49% in June. Experts in the sector view the figure as sluggish, pointing to weak investment demand as businesses remain cautious about new projects, keeping loan disbursement slow.

In contrast, net credit growth in the public sector was significantly higher at 14.51%. To manage budget deficits, subsidy expenses, and project spending, the government has increased its borrowing from the banking system, leading to growing dependence on banks.

Credit growth for state-owned corporations and autonomous institutions, however, was negative at -2.39%, indicating that these entities are either repaying previous loans or reducing new borrowing.

A managing director of a private bank, speaking on condition of anonymity, explained that inflows of remittances now far outweigh outflows due to lower imports and reduced pressure from foreign debt repayments.

"Our banks have a set limit on foreign currency holdings. But the inflows are pushing their positions above those limits. As a result, they are selling dollars to the central bank and encashing them in taka," he said.

As of 14 September 2025, Bangladesh's foreign exchange reserves stood at $25.67 billion under the BPM6 calculation method, according to central bank data.