The dollar rate is showing signs of stability in the market as Bangladesh’s gross foreign exchange reserve has been increasing despite paying nearly $1.5 billion in dues to foreign companies over the past two months.
This growth was largely driven by higher remittance inflows and the Bangladesh Bank’s order to stop dollar sales from its reserve.
According to Bangladesh Bank data, the reserve rose to $19.93 billion on October 16, up from $19.38 billion on September 18.
Central bank officials said that about $1.5 billion out of $2.5 billion in dues was paid to foreign companies for imports of goods and services such as fertilizers, electricity and oil.
Instead of drawing from its reserve, the central bank sourced dollars from the interbank foreign exchange market, allocating these funds to state-run Sonali Bank for the payments, they said.
The decision to stop selling dollars from the reserve has played a crucial role in stabilizing the reserve position and the dollar market, they said.
In addition, both formal and informal markets for dollars have remained stable in recent weeks, with the rates hovering at Tk120 a dollar in banks and Tk121 on the open market.
The rates have remained at the same position since August.
This shift in the policy came after the political changes on August 5, as the new governor halted dollar sales from the reserve, reversing the previous approach.
Under the previous administration, the central bank faced with a severe dollar shortage starting in December 2021 sold nearly $34 billion from its foreign exchange reserve that depleted the reserve by nearly half from a peak of $48 billion.
Bangladesh Bank officials said that increased remittances and exports and declining imports contributed most to the reserve growth and foreign currency market stability recently.
According to Bangladesh Bank data, the remittance inflow rose to $2.40 billion in September compared with that of $1.33 billion in the same month in 2023 after major political changes on August 5.
The inflow was $2.22 billion in August 2024.
Exports increased by 7.89% to $11.75 billion in the July-September period of FY25 compared with those in the same period of the past year.
Imports declined by 1.16% in the July-August period compared with those in the same period past year.
However, according to conventional valuation by the Bangladesh Bank, the foreign exchange reserve increased to $25.18 billion on October 16 from $25.50 billion on September 10.
The Bangladesh Bank adheres to the IMF’s Balance of Payments and International Investment Position Manual, 6th edition (BPM6), for calculating both the gross international reserve (GIR) and the net international reserve (NIR).
The dollar rate reached Tk120 a dollar from Tk106 in June 2023, Tk93.45 in June 2022 and Tk84.81 in June 2021.
