Bangladesh foreign exchange reserves cross $31bn after ADB disburses $1bn loan

A massive surge in inward remittances and central bank dollar purchases bolster forex holdings

Bangladesh’s foreign exchange reserves have crossed the $31 billion mark after the Asian Development Bank (ADB) disbursed $1 billion in budget support loans.

At the end of Sunday, reserves stood at $31.07 billion under the Balance of Payments (BPM-6) accounting method, while gross reserves reached $35.62 billion, according to Bangladesh Bank.

Bangladesh Bank spokesperson and Executive Director Arief Hossain Khan said the inflow from the ADB added to already strong reserve conditions.

“Remittance inflows had already surged and dollar purchases had kept reserves at a satisfactory level. The ADB loan has further increased it. There is no longer any concern or anxiety regarding this indicator,” he said.

Gobinda Bar, head of external relations at the ADB Dhaka office, told bdnews24.com on Sunday night that the disbursed funds were part of two projects.

“A total of $1 billion has been released under two projects. One is under the social safety net programme, and the other relates to financial sector reforms,” he said.

Reserves stood at $30.05 billion (BPM-6) and $34.59 billion (gross) at the end of Jun 11. Earlier on May 7, reserves had reached $30.64 billion (BPM-6) and $35.33 billion (gross), before falling after an Asian Clearing Union payment of $1.51 billion.

The central bank said reserves had dropped to $29.50 billion (BPM-6) and $34.15 billion (gross) after that payment, but later recovered due to higher remittance inflows and dollar purchases from banks.

Remittances rose to $3.43 billion in May, up 15.34 percent year-on-year. In the first 13 days of June alone, inflows reached $1.36 billion.

The central bank has also purchased $1.01 billion from banks so far in June, bringing total purchases in the current fiscal year to $6.42 billion.

Data show that gross reserves crossed the $35 billion mark in late February after 39 months, having last been above that level in November 2022.

In the first week of June, reserves fell after a $1.51 billion import payment to the Asian Clearing Union, which is settled every two months.

Bangladesh Bank data show BPM-6 reserves are considered the immediately usable foreign exchange stock.

At current levels, reserves are sufficient to cover about four and a half months of import payments.

The country’s import bill in April stood at $7.07 billion, meaning current reserves are above the international benchmark of at least three months of import cover.

Officials expect reserves to rise further before the next ACU payment cycle due in early July.