BB reduces USD support to banks

The Bangladesh Bank (BB) has reduced the US dollar support to banks from its foreign exchange reserve to protect the reserve.

Last week, the central bank decided that it will provide US dollar support only to the state-run banks to meet the import payments of government projects, according to BB officials.

Bankers have also said that they are not getting enough US dollar support from BB despite huge pressure to settle import payments.

On Thursday, the banking regulator sold only $35 million to the banks and $16 million on Wednesday.

However, a few days ago, the central bank was selling over $50 million per day.

A senior BB official said that the country’s forex reserve is still falling and it has created concern among various stakeholders of the economy. That’s why BB is trying to protect the reserves.

On Thursday, Bangladesh’s forex reserve stood at $35.81 billion due to BB’s US dollar selling spree. From July 1 to November 3 of this fiscal year, the central bank sold over $5 billion to banks in a bid to cover their dollar shortage.

Now, banks, especially the state-run ones, are taking US dollar support from BB for settling import payments of Bangladesh Petroleum Corporation, Bangladesh Agricultural Development Corporation and Bangladesh Chemical Industries Corporation, among other government agencies.

The central bank had injected a record $7.62 billion from its reserve into banks in the last financial year. The country’s forex reserve was at a record $48 billion in August last year.

Meanwhile, the reserves may drop below $35 billion as the country is set to clear $1.32 billion in payments to the Asian Clearing Union on November 7.