Forex reserves hit 6-year low at $31.14b

The country’s foreign exchange reserves dropped to the lowest level in six years at $31.14 billion on Tuesday after the Asian Clearing Union (ACU) payment.

The forex reserve had crossed the $31 billion mark in 2017.

The central bank cleared $1.05 billion ACU import bills on Monday for the months of January and February this year, said a senior official of the Bangladesh Bank.

The ACU is an arrangement to settle payments for intra-regional transactions among its member countries, including Bangladesh.

The central bank is still pumping the US dollar to cool down the forex market. From July to March 1 of FY23, the banking regulator sold over $10 billion to banks.

Banks, especially the state-run ones, are taking USD support from the central bank to settle import payments of Bangladesh Petroleum Corporation, Bangladesh Agricultural Development Corporation, and Bangladesh Chemical Industries Corporation among other government entities.

Meanwhile, the country’s gross forex reserves stood at $31.14 billion on Monday but usable reserves were $24.14 billion, as per central bank data.

Gross forex reserves reached a record high of $48 billion in August 2021. That month, the Bangladesh Bank started injecting USD into the forex market as banks began facing shortages of the American currency due to growing import payments triggered by the economic recovery from the Covid-19 crisis.

The currency crisis intensified a few months later when Russia invaded Ukraine in February last year, further disrupting the global supply chain.