Forex reserves decline 19% y-o-y in August

Bangladesh’s foreign exchange reserves stood at $38.94 billion at the end of August 2022, down nearly 19 percent year-on-year, Bangladesh Bank figures showed.

At the end of August 2021, the country’s foreign exchange reserves reached its peak at over $48 billion due to fewer imports by businesses amid the coronavirus lockdown.

When the government moved away from the lockdown, economic activities revived from the last quarter of 2021 and businesses started importing raw materials to boost production in their factories, which contributed to a slide in forex reserves.

Accordingly, forex reserves held by the Bangladesh Bank declined to $46.15 billion at the end of December 2021 and $41.82 billion in June 2022, the last month of the fiscal year.

Though the Bangladesh Bank has tightened imports of non-essential and luxurious items, sliding exports and remittances, especially in September have become a concern for the exchange rates and economy as well.

The latest data showed Bangladesh’s exports declined 6.25 percent to $3.90 billion in September compared to the same month a year ago. Also, the inflow of inward remittances nosedived to $1.54 billion, nearly 11 percent down year-on-year.

blamed the Russia-Ukraine war for the sliding export orders as the buying countries in the west have been facing exorbitant inflation in recent months.

Meanwhile, as of September 22 this fiscal year, the central bank sold $3.2 billion to banks to meet their demand for the greenback. In the fiscal year 2021-22, the BB sold $7.62 billion to banks amid a shortage of dollars.