Monday, April 15, 2024


Dhaka Tribune

BB: Increased dollar reserve in banks from higher remittances

Short-term foreign debt liability was $16.41 billion in September of 2022, which went down to $12.42 billion during the same month of 2023

Update : 23 Nov 2023, 11:14 PM

Bangladesh Bank has noted an increase in dollar reserves in private banks, attributing this rise to higher remittances and reduced import liabilities. 

The central bank commended the recent decision by the Bangladesh Foreign Exchange Dealers' Association (Bafeda) and the Association of Bankers, Bangladesh (ABB) to devalue the dollar by Tk0.50.

During a press conference at the central bank on Thursday, its spokesperson Mezbaul Haque reported that the short-term foreign debt liability, which was $16.41 billion in September of the previous year, has now decreased to $12.42 billion. He expressed optimism that within the next year, it is anticipated to further decrease to $6.9 billion. Additionally, Haque highlighted a current account surplus of $1 billion.

“In the last several months, we closely monitored the demands for imported products and their supply. Our observations reveal a surplus in the current account balance. Although our financial account is currently in deficit, it is anticipated to improve in the upcoming days, with debt payments gradually decreasing.”

He also added saying: Now the loan is opened with immediate dollar payment. In addition, the supply of dollars in banks is now much more than the demand. As a result, the decision of Bafeda (Bangladesh Foreign Exchange Dealers' Association) is correct.

The count of banks holding long positions has risen from 31 to 39 over the past year. 

Regarding dollar flow in private banks he said, at present 39 banks in the country are in a long position. Last year this time there were 31 banks.”

However, a bank's net open position (NOP) is the sum of all short or long positions in a foreign currency or all foreign currencies. A long position indicates a net foreign currency asset position, while a short position indicates a net foreign currency liability position.

Highlighting the positive position of all banks' net open position, the spokesperson emphasized that there is an ample supply of dollars. Therefore, Bafeda’s decision to depreciate the dollar by Tk0.50 per dollar was deemed prudent, he added.

However, This marks the first adjustment in the dollar price since August 2021 when the Bangladesh Bank was setting the price. Since September of the same year, Bafeda and ABB have been jointly determining dollar prices to stabilize the exchange rate, making this recent move a significant step in managing the currency's valuation.

As per Bafeda and ABB decision, the price for purchasing dollars for export proceeds and remittance fell to Tk110, down from Tk110.5 and the price of selling dollars for import settlements was set at Tk110.5 which was Tk111 earlier.

Currently, the country's gross foreign exchange reserves are $25.16 billion.

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