Bangladesh’s foreign exchange reserves have once again crossed the $26 billion mark.
According to Bangladesh Bank data, total reserves stood at $26.51 billion as of Tuesday. Under the IMF's BPM6 (Balance of Payments Manual 6) standards, this amounts to $21.17 billion.
Experts say the rise in reserves has eased pressure on import payments and made it easier for banks to open Letters of Credit (LCs).
They believe that the success behind the reserve's growth stems from political stability, strategic decisions in remittance management, and Bangladesh Bank Governor Dr Ahsan H Mansur’s firm stance and pragmatic policies.
Additionally, maintaining good relations with international institutions and bringing discipline to the import system have yielded positive results.
Moreover, after the Russia-Ukraine war, the exchange rate of the dollar surged from Tk85 to Tk128, creating a crisis.
Currently, the exchange rate has stabilized at Tk123, which has helped normalize imports and keep inflation somewhat under control, according to relevant sources.
Fluctuations in reserves
This isn’t the first time reserves have crossed the $26 billion milestone this year. The first time was in February.
Previously, in 2021, Bangladesh’s reserves reached their highest level at $48.06 billion.
Following that, they steadily declined, dropping to a low of $24.19 billion on November 11, 2024. Under BPM6, this was only $18.46 billion.
Experts attributed the fall to global challenges and internal mismanagement. Bangladesh Bank data shows that since 2022, reserves have decreased by an average of $1.3 billion per month.
However, in 2024, reserves crossed the $26 billion mark at least twice.
The first time was on June 27, after receiving the IMF’s third loan tranche, when reserves rose to $26.5 billion. The second time was on December 29, reaching $26.21 billion (or $21.39 billion under BPM6).
As of July 31, 2024—during the final week of the Awami League government—reserves stood at $25.92 billion (or $20.48 billion per IMF standards).
Following a dramatic political shift on August 5, a caretaker government led by Dr Muhammad Yunus was sworn in on August 8. On that day, reserves stood at $25.58 billion (or $20.47 billion under BPM6).
In 2025, the latest instance of reserves crossing $26 billion occurred on February 26. Experts credit this growth primarily to remittance inflows.
In February, remittances totaled $2.52 billion—25% higher than the same period the previous year.
In March, remittances hit a record $3.29 billion, significantly boosting reserves.
Bangladesh Bank’s efforts to control imports and curb hundi (informal money transfer) also helped.
Though the exchange rate fluctuated after the change in government, it eventually stabilized at Tk123.
Shift with the new governor
The turnaround began with a change in the governor of Bangladesh Bank. Economist Dr Ahsan H Mansur replaced Abdur Rouf Talukder.
Dr Mansur took a strict stance on restoring reserves.
At a time when Bangladesh faced deep crises—political instability, declining remittances, rampant hundi transactions, and pressure from foreign debt repayments—former governor Talukder fled and resigned. It was then that Dr Mansur stepped in.
Immediately, he implemented practical policies. Their impact was swift—reserves began to gradually improve after August 8, 2024.
Remittances in August rose to $2.22 billion, 39% higher than the same month the previous year, temporarily boosting reserves.
By the end of March 2025, total reserves had reached $25.51 billion—marking the return to the $25 billion level seven months and 23 days after the change in government. By mid-April, it had increased further to $26.51 billion, once again surpassing this milestone.
Relief for businesses
With export earnings and remittance inflows increasing, dollar supply in the banking sector improved, helping to ease the dollar crisis. This made opening LCs easier for importers, leading to a rise in imports.
According to Bangladesh Bank, LCs worth $47.28 billion were opened between July and February of the 2024–25 fiscal year—an increase of 4.62% from the same period the previous year. During this period, LCs worth $45.99 billion were settled—up 4.07% from the previous year.
Banks are now more willing to finance imports due to increased dollar supply from exports and remittances. In February alone, import LCs worth $6.26 billion were opened—about 20% higher than the same time last year.
Increase in external debt repayments
Between August 2024 and March 2025, even though reserves returned to $25 billion, foreign loan and interest payments did not decline—in fact, they increased.
According to the Economic Relations Division (ERD), $2.636 billion was repaid between July and February of FY2024–25, nearly 30% higher than the same period the previous year.
This includes $1.962 billion in principal (a 63.4% increase) and $944 million in interest (a 17.1% increase).
Meanwhile, development partners disbursed $4.13 billion in loans and grants during this period—17.3% less than the previous year. In other words, reserve growth wasn’t due to lower repayments; rather, the pressure increased.
However, in the first quarter of 2025, the government initiated the rescheduling of several Chinese and multilateral loan repayments, reducing immediate foreign outflow pressure.
According to Bangladesh Bank, shifting some repayments to the second quarter had a positive impact on reserves.
Firm stance and incentive policies
The main driving force behind overcoming the reserve deficit was Bangladesh Bank’s policy intervention and incentive measures. Experts say the most significant contributors were effective policies to boost remittances and control imports.
As soon as he took office, Dr Ahsan H Mansur took a hardline stance on restoring reserves.
He introduced mobile court-style operations to curb hundi and increased incentives to encourage formal remittance inflows. Luxury imports were restricted. Oversight measures were introduced to control irregularities in import expenses. Additionally, audits were introduced to restore confidence in the banking system.
These measures quickly yielded results. In August 2024, remittances totaled $2.22 billion—39% higher year-on-year—temporarily boosting reserves.
Moreover, he halted dollar sales, implemented market stabilization strategies, controlled LCs, reduced imports of fuel and capital goods, and saved reserves.
He ensured good governance in the banking sector, dismantled several poorly performing bank boards, and intensified anti-hundi efforts to restore trust in remittances.
As a result, remittances, export earnings, and foreign assistance all began to rise. In just three months, $5 billion in debt was repaid without touching the reserves.
All in all, reserves recovered within just seven and a half months.
In this context, Bangladesh Bank spokesperson and Executive Director Arief Hossain Khan told Bangla Tribune: “Alongside the rise in exports and remittances, the central bank has increased its oversight on LCs for imports.
"This has reduced pressure on the dollar market. Additionally, disciplined dollar management by Bangladesh Bank has supported reserve growth.”
He added: “Under the leadership of Governor Dr Ahsan H Mansur, Bangladesh Bank is working consistently to keep reserves stable. Officials are working in a coordinated way to protect reserves and restore confidence in the currency market.”
Import control as a major initiative
Another major factor behind the rise in reserves was the continued reduction in import expenses. Since 2023, the government imposed strict restrictions on the import of luxury goods and the opening of LCs (letters of credit).
The new administration increased monitoring over LCs and restructured expenditures in the fuel and power sectors. As a result, the demand for foreign currency declined, keeping the reserves under less pressure.
According to data from Bangladesh Bank, import expenditure in the fiscal year 2021–22 was $82.50 billion. In the following two fiscal years, it dropped to $68.60 billion and $63.22 billion respectively.
The main reason behind this decline was the import control policy, which included stricter LC regulations and discouragement of non-essential imports.
However, with the reserve situation returning to normal, import spending increased by 4.44% during July–February of the 2023–24 fiscal year, reaching $43.73 billion. As exports and remittances grew, the supply of dollars in banks also increased, which helped reinvigorate imports.
Policy changes in remittance
According to analysts, a combination of coordinated measures contributed to the recovery of reserves. Among these, policy changes in remittance and the restoration of trust were particularly significant.
In just the first three months of 2025, the country received $6.75 billion in remittances, which is 12% higher than the same period last year.
A major contributing factor was the increase in the incentive rate from 2 to 3%. At certain times, some banks even offered up to 5% incentives to customers.
Additionally, encouragement to send remittances through legal channels, strict monitoring against hundi (informal money transfers), and diplomatic efforts to expand labor markets in the Middle East and other regions have proven effective.
In this regard, Dr Zahid Hussain, former lead economist at the World Bank's Bangladesh office, said: "At this moment, remittance is the most effective source of export earnings for increasing reserves. The government has made the right decisions at the right time to boost this remittance flow."
Officials from the central bank also noted that remittances were the main driving force behind the reserve recovery. In February, remittances reached $2.52 billion, which was 25% higher than the same month the previous year.
This figure rose to $3.29 billion in March, setting a new record for the highest remittance in a single month in the country’s history.
Thanks to policy changes by Bangladesh Bank and effective actions against hundi, remittance inflow in 2024 reached nearly $27 billion—22% more than the previous year.
From July to March of the 2024–25 fiscal year, expatriates sent $21.77 billion to the country, compared to $16.69 billion during the same period the year before.
A significant jump in remittances was observed starting in September. In March 2025 alone, remittance inflow reached $3.29 billion, setting a new record.
With remittances remaining above $2 billion each month, this consistent flow has provided a strong foundation for the economy.
