Foreign-exchange reserves of Bangladesh still stay almost static despite a record volume of remittance inflow in recent months as officials say necessary external expenditures are being met.
The Financial Express (FE) has observed the trends of the remittance and movement of the forex reserves in recent months. Despite the record inflows of foreign currencies sent by Bangladeshi citizens working abroad for the last several months, the volume of reserves in IMF arithmetic has been hovering in-between US$19.0 billion and $21.0 billion.
Sources at Bangladesh Bank (BB) have said the additional inflow of remittances helps stop forex bleeding by making the international reserves stable amid payment buildups over the years.
They say the increased remittance has been used to meet foreign- currency obligations of banks because of growing government imports, overdue payments by the banks, public debt-servicing and to minimise the gap between imports and exports.
"That's why you don't see significant jump in reserve stock. But it is stable and stays close to $20 billion even after clearing ACU (Asian Clearing Union) payments amounting to $1.75 billion early this month," said one BB official, on condition of anonymity.
In fact, the record inflow of remittance in recent times helps stop further depletion in the forex reserves, the central banker explains.
According to BB data, the forex-strapped country received $2.53 billion in February last, which was the third-largest monthly remittance earning in the country's history after December 2024 ($2.63 billion) and July 2020 ($2.60 billion).
In the first 18 days of this month, remitters sent foreign currencies equivalent to $2.12 billion. And the reserves stood at $19.86 billion in accordance with BPM6 until March 18, 2025. The reserve size was $20.95 billion, $19.96 billion and $21.39 billion by the end of February, January and December 2024 respectively.
Foreign commercial liabilities in private sector decreased significantly in February this calendar year following higher inflow of remittances alongside close monitoring by the central bank.
Payment overdue against foreign letters of credit (LCs) dropped more than 76 per cent to US$105 million by the end of February 2025 from $445 million as on November 30, 2024, according to the central bank data. On the other hand, the payments for government imports, particularly for fertilisers, fuels and power, have increased significantly in recent months and a portion of the increased remittance is being used to foot the bill, the BB sources said.
Regarding import settlements, the country settled import orders amounting to $5.33 billion in November last followed by $6.12 billion in December and $5.93 billion in January.
Seeking anonymity, another BB official said the prevailing higher inflows of remittance have now been working as a backup to the economy, particularly on its external fronts.
It basically helps give support for government debt servicing, clear public-import payments, improve current-account balance in the balance of payments (BoP) and minimise gap between exports and imports, the official said.
As part of debt servicing, the government cleared $1.86 billion against concessional loans during the July-January period of the current fiscal year.
"The way the remittance is flowing in here, the monthly remittance count could cross $3.0 billion by the end of this March," he said.
Former lead economist of World Bank's Dhaka office Dr Zahid Hossain says the reserves dropped every two months after ACU payment and that they have been observing some types of stability in the low level of the reserves for the last few months, which is quite okay.
In fact, the noted economist says, the demand for foreign currencies is made largely by the market itself because of growing inflow of remittance. So, the forex reserves are not feeling the pressure of using US dollar.
"We'll see what would be exchange-rate policy of the central bank once all forms of arrears will be cleared," he adds.
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