The country's foreign exchange reserves have started to reach a strong position again.
After a long period of pressure and uncertainty, according to the latest data from Bangladesh Bank, the country's foreign exchange reserves have reached about $31 billion according to the International Monetary Fund's (IMF) accounting method BPM-6.
According to Bangladesh Bank data, as of last Thursday (May 7), the country's total or gross reserves stood at $35.62 billion.
The actual usable reserves according to the IMF's BPM-6 method stood at $30.96 billion. That is, the country's reserves are now very close to $31 billion.
Economists and bankers say that the reserve situation has improved in recent times due to increased remittance flows, stable export earnings, and some control over import costs.
As a result, pressure on foreign transactions is reducing and stability is gradually returning to the dollar market.
Bangladesh Bank officials said that expatriate income is currently acting as one of the main drivers of reserve growth.
The flow of foreign currency has also increased due to the increase in the tendency to send remittances through banking channels. At the same time, export income is also on a positive trend.
Especially, the growth in exports of the ready-made garment sector, remittances from expatriate Bangladeshis, and the exemption of foreign loans and development assistance funds are having a positive impact on the reserves.
On the other hand, the pressure on the dollar has also decreased somewhat compared to before due to the decrease in imports of unnecessary and luxury goods. As a result, the central bank does not have to sell additional dollars in the market.
According to analysts, the increase in reserves means that the country's ability to meet import costs has strengthened.
With the current reserves, it will be possible to meet import costs for several months.
If the reserves are strong, it also sends a positive message to international lending agencies and foreign investors. This increases confidence in foreign transactions and improves the country's credit capacity.
In addition, economists believe that the improvement in the reserve situation may reduce volatility in the dollar market, which will also help control inflation. Because when the dollar price increases, the prices of import-dependent products also increase.
Now, due to the increase in reserves, there is a possibility of reducing that pressure to some extent.
In 2021, the country's foreign exchange reserves were more than $48 billion. However, due to the global energy crisis, the Russia-Ukraine war, high import costs and abnormal demand for dollars, the reserves began to decline rapidly in the future.
To manage the situation, Bangladesh Bank tries to stabilize the market by selling dollars at different times. At the same time, various initiatives are taken to control imports, increase remittances through legal channels and ensure foreign loan support.
Those concerned believe that the positive impact of those steps has started to be visible in recent times.
Bangladesh Bank generally publishes two types of reserve accounts.
Gross reserves are the central bank's total foreign exchange and assets. It also includes various funds and short-term liabilities.
On the other hand, BPM-6 reserves are actual usable reserves as per the international standards of the IMF. It excludes money that cannot be used immediately.
Currently, BPM-6 account is given more importance internationally.
Accordingly, the concerned people see Bangladesh's reserves reaching close to $31 billion as a positive development for the economy.