Reserves fall below $34b

Repeatedly dipping into the reserves for dollar sales has led to the country's foreign exchange reserves falling below $34 billion to $33.86 billion.

Another $71 million was sold from the reserves to state-owned banks on Wednesday, the central bank said.

With this, the sale of dollars from the reserves has exceeded $6 billion since July of the current financial year.

The central bank sold a record $7.62 billion in the fiscal 2021-22. In the previous fiscal year, the central bank had bought around $7.93 billion from various banks.

According to the terms of the International Monetary Fund (IMF), the reserves will fall by another $8 billion to about $25 billion if calculated using international methods.

The central bank has taken various measures to control imports to rein in the cost of dollars, including reducing the opening of letters of credit (LC), but as previously outstanding LCs are now being settled, the pressure on reserves has not eased.

As per the decision of the banks, they are collecting remittance at Tk107, while export financing has been set at Tk100.

The Bangladesh Foreign Exchange Dealers Association (BAFEDA) said the weighted average cost of buying dollars by banks on Wednesday was Tk102.56.

They are selling dollars to cover the cost of imports at an increase of Tk1 from the purchase price.

According to data from the Bangladesh Bank, reserves began to deplete following years of consistent growth.

Ten years ago, at the end of June 2013, the foreign exchange reserves stood at just $15.32 billion.

It had risen to $33.68 billion by 2018. It reached $48.06 billion for the first time in August last year, before declining steadily over the past few months.