Rising imports and falling exports drain $1bn from Bangladesh’s reserves

Record remittance inflows were not sufficient to bridge the trade gap, BB data shows

A growing gap between weak export earnings and higher import costs has reduced Bangladesh’s foreign currency reserves by nearly $1 billion over the past month, according to central bank data.

According to the Bangladesh Bank (BB), the country's usable reserves, calculated under the IMF’s BPM6 manual, stood at $29.29 billion at the close of business on Sunday.

Gross reserves, on the other hand, were recorded at $33.99 billion.

Arief Hossain Khan, executive director of the BB, confirmed the updated figures.

The decline marks a significant shift since Feb 26, when Governor Md Mostaqur Rahman assumed office.

On that date, BPM6 reserves were $30.27 billion, representing a drop of $983.2 million in just over 30 days. Similarly, gross reserves fell by $1.03 billion from the $35.03 billion recorded in late February.

Bankers attribute this contraction to a persistent slump in export earnings that has lasted several months.

While expatriate workers have sent home record amounts of money, the surge in remittance has been insufficient to bridge the deficit created by rising import bills.

The central bank reported that during the first 28 days of March, non-resident Bangladeshis channelled $3.33 billion through banking systems, a 3.8 percent increase compared with the same period last year.

This follows a robust February, which saw a 19.5 percent growth in remittance.

According to the Export Promotion Bureau (EPB), exports in February reached $3.49 billion, a 12 percent decline compared with the previous year.

For the first eight months of the current fiscal year, overall export growth has contracted by 3.15 percent.

In contrast, import demand continues to climb, with growth recorded at 4.64 percent over the first seven months of the fiscal year.

To stabilise the volatile foreign exchange market, the central bank has been purchasing dollars from commercial banks. In the current fiscal year, the Bangladesh Bank has bought $5.49 billion.

Under the new governor’s tenure, however, market intervention has been minimal.

The central bank made only one purchase on Mar 2, buying $25 million at a cut-off rate of Tk 122.30.