With significant developments, Bangladesh's economic landscape is undergoing a notable shift.
Remittances have seen consecutive growth in the last couple of months, while export earnings are on the rise as well.
Furthermore, import costs have decreased, reducing the overall trade deficit.
Due to the restrictions of Bangladesh Bank, the overall import of capital machinery in the country has decreased.
According to the central bank’s data, there was an account surplus of $1.92 billion in December last year.
Meanwhile, expatriate earnings are significantly influencing the current economic scenario of Bangladesh. Over the past five months, remittances have consistently totalled approximately $2 billion.
After paying the import bill of $1.29 billion with the Asian Clearing Union (ACU), Bangladesh's foreign exchange reserve has now dropped below $20 billion.
According to the central bank, foreign exchange reserves decreased to $19.99 billion after March 7, which was $21.15 billion on March 6.
Meanwhile, Since the introduction of the money-dollar swap facility, Bangladesh Bank has seen an increase of $1 billion in its reserves within a span of 15 days.
However, while the total reserve of the central bank is on the rise, the net or real reserve remains stagnant. This is because these dollars are not permanent additions; they must be returned once the swap period ends.
Sources say that banks are benefiting from the swap facility, as they are spending a maximum of 2.5% of the funds to take money by depositing dollars.
Banks can invest the money in the government's treasury bills at up to 11.5% interest. Alternatively, they can lend out these funds at an interest rate of 13.11%.
As a result, commercial banks are getting the opportunity to earn more from low-cost funds.
According to bankers, Bangladesh Bank started swapping currencies with commercial banks on February 20, which is playing a helpful role in increasing reserves.
A senior official of the central bank said more than $2 billion in remittances came in February.
The ongoing currency swapping with banks has contributed to the steady increase in gross reserves. Earlier, the reserve was $20.85 billion on March 4.
However, the central bank is selling dollars from the reserve as before to meet the government's import liability. However, the volatility that was going on in the dollar market has also reduced slightly. As a result, the price of the dollar is not increasing.
Previously, banks were purchasing dollars at Tk120, but now the prices have dipped to Tk118-119. Consequently, importers are acquiring dollars at lower rates now.
In this regard, the Executive Director of the Policy Research Institute of Bangladesh Dr Ahsan H Mansur said it was a good sign that the total reserve is increasing due to the currency swap facility. “Both the central bank and the commercial bank are benefiting from this.”
He mentioned that the dollar crisis has reduced slightly due to the increase in interest rates on loans.
Meanwhile, earnings from the export of goods in February were about $5.19 billion – which is 12% more than from February last year.
Exports increased by $560 million in February last year compared to February last year.
However, in January, the highest export earnings in the country's history came to $5.76 billion.
According to the Export Promotion Bureau (EPB), exports in February were 12.04% higher than the same month last year, marking the highest growth rate recorded in any month of the current fiscal year.
According to the data for the July-December of the current fiscal year 2023-24, overall imports in the first six months fell by 19.80% to $3.05 billion compared to the same period of the previous financial year.
At the same time, exports increased by 0.64% to $2.59 billion. As a result, the trade deficit has come down to $4.59 billion. The trade deficit was $12.31 billion in the same period last year.