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Dhaka Tribune

High remittance, currency swap boost forex reserves

Bangladesh on Sunday saw the highest remittance inflow in the past eight months in February, amounting to $2.16bn

Update : 06 Mar 2024, 05:08 PM

The country's gross forex reserves increased by $727 million in five days, reaching $21.3 billion on Monday, thanks to currency swap with banks and an eight-month high remittance figure.

According to data from the Bangladesh Bank, gross reserves stood at $20.57 billion as per BPM-6 on 28 February.

The data also showed that the money market swapped currency equivalent to $100 million on Monday.

The central bank has provided commercial banks with currency swap facilities since 15 February this year, which measure has since started contributing to the reserves.

The currency swap enabled the Bangladesh Bank to shore up its gross reserves as banks have been exchanging dollars from their nostro accounts (accounts held by domestic banks in foreign countries).

The influx of dollars via the currency swap will not contribute to the replenishment of net reserves, as these represent short-term obligations.

Net reserves are determined by deducting short-term liabilities from gross reserves.

The Bangladesh Bank provided over Tk6,500 crore till the end of February to banks within a mere three-day period, in exchange for nearly $600 million, addressing their liquidity challenges.

The banks swiftly turned to the central bank to access funds at a favourable 2.7% interest rate, significantly lower than the 8% borrowing rate, through a repurchase agreement, also known as a repo.

Bangladesh on Sunday saw the highest remittance inflow in the past eight months in February, amounting to $2.16 billion. 

February's remittances marked a significant increase of 38.46% compared to the same month last year, as per Bangladesh Bank data. 

In June 2023, the country saw a higher inflow of remittances amounting to $2.19 billion.

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