Forex reserves drop to $19.4b after ACU payment

Bangladesh's foreign exchange reserve has dropped to $19.44 billion after the payment of $1.37 billion in import bills of July and August.

The government paid the bill to the Asian Clearing Union (ACU) on Monday.

The ACU is a Tehran-based organisation for settling payments among nine countries -- India, Bangladesh, Bhutan, Iran, the Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.

Under the ACU, Bangladesh clears import bills every two months and the reserve usually falls after the payment is made.

On August 29, the foreign exchange reserve stood at $20.54 billion, as per calculations of the International Monetary Fund's Balance of Payment Manual 6, according to Bangladesh Bank data.

As per the central bank's conventional calculations, the gross reserve stands at $24.5 billion after the ACU payment. The gross forex reserve stood at $25.56 billion before the payment.

Bangladesh's reserves have kept falling since it surged to a record high of $48 billion in August 2021, driven by a spike in import payments in the post-pandemic period.

This downward trend continued amidst increases in import bills against lower exports and remittance earnings until the end of the Awami League regime on August 5 in the face of a students-led mass movement.

After the changeover, the central bank stopped selling dollars from its reserve.

Besides, the banking regulator also devalued the taka to Tk 120 against each US dollar amid a shortage of the greenback and pressure on banks to settle import payments.

After the political changeover, remittances sent by Bangladeshis living abroad soared nearly 39 percent year-on-year to $2.2 billion at the end of August, easing the pressure on the foreign exchange reserves to some extent.

According to bankers, the remittance receipts may rise in the days to come thanks to the effort of the central bank and support of the remittance earners towards the new interim government.