Forex reserves see dramatic drop in a week

The country’s foreign currency reserves fell drastically by nearly half a billion US dollars in the week till Wednesday as the central bank had to deploy dollars aggressively to fund imports and return commercial bank assets.

The reserves fell by $534 million in the seven days till Wednesday standing at $19.45 billion, down from $19.98 billion on the previous Wednesday (20 March), as per Bangladesh Bank data.

The reserves were above $21 billion in the first week of March, and went below $19 billion due to the payment of Asian Clearing Union (ACU) bills.

Since then the reserves have fallen further, and a strong remittance inflow in the month of Ramadan has not been enough to ease the rate of decline.

Pressure on the Bangladesh Bank stash is high likely due to commercial banks taking back the dollars they deposited with the central bank under a currency swap scheme last month.

At the same time, the central bank has to keep digging into its forex reserves to pay for import bills and expenses for state-enterprises.