Banks’ forex balances on the rise
Gross foreign exchange balances held by commercial banks in Bangladesh rose to a 19-month high of $5.53 billion in June, owing to lower imports and higher export and remittance earnings, central bank data showed.
The previous high of $5.58 billion was registered in November last year.
June's holdings were up 6.23 per cent from the $5.21 billion held at the end of 2021-22 and an increase of 8 per cent from May this year when it stood at $5.12 billion.
July's figure was not immediately available.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank Limited, said since remittance and export earnings were in the positive territory and imports fell in the last financial year of 2022-23, the forex holdings at commercial banks rose.
"Letters of credits related to large-scale imports have already been settled."
Despite the turmoil in the global economy, earnings from merchandise shipment rose 6.67 per cent to $55.55 billion in FY23, while remittance inflow grew 2.75 per cent to $21.61 billion.
Imports declined 14.15 per cent to $69.97 billion in the July-May period of FY23. The data for the entire financial year has not been released yet.
Rahman, however, said the positive growth of the forex holdings does not mean the US dollar crisis in Bangladesh is over and banks are sitting on a huge volume of international currencies.
"Still, there is a scarcity of US dollars. As a result, we are not being able to open LCs in line with demand."
Outstanding forex reserves in the banking sector were $4.58 billion in 2019-20, $5.52 billion in 2020-21, and $5.2 billion in 2021-22, according to the Bangladesh Bank.
Owing to persistently high import payments, gross foreign exchange reserves in Bangladesh declined to $31.20 billion at the end of FY23 from $41.82 billion in FY22.
Meanwhile, the country's forex reserves have slipped as per the definition of the International Monetary Fund's balance of payments and investment position manual.
The central bank began publishing the gross international reserves (GIR) in line with the manual on July 12 to ensure that the country's dollar stockpile is reported accurately. On the day, it stood at $23.58 billion. On July 19, the GIR fell to $23.45 billion.
The GIR includes gold, cash US dollar, bonds and treasury bills, reserve position at the IMF and special drawing rights holdings, a form of international money created by the global lender.