Bangladesh's foreign currency reserves declined by $1.3 billion in a month as inflows stood lower than outflows for payments, including imports, which reflects increasing pressure on the country's external account.

Reserves stood at $20.48 billion on July 31, down from $21.78 billion a month ago, according to data published by the central bank.

The depletion in foreign exchange reserves comes just two days after S&P Global downgraded Bangladesh's rating amid persistent pressure on the country's external accounts and deadly government job quota reform protests.

The US-based credit ratings agency lowered its long-term sovereign ratings on Bangladesh to B+ from BB-.

It said external pressure particularly stemmed from the continued decline in foreign exchange reserves.

This has occurred despite import compression measures enacted by the central bank and a smaller current account deficit.

S&P said the gross reserves, measured on an IMF formula, were $21.8 billion at the end of June 2024, down 35 percent from June 2022.

The July 31 forex reserves would cover Bangladesh's 3.7 months of import bills.