In the last fiscal year, the most pressing problem in economy was the dollar crisis and the devaluation of the taka.
The central bank reserves fell by $10.52 billion, or 25.39%, between June 30, 2022 and June 30, 2023.
According to Bangladesh Bank data, the exchange rate of the US dollar against the Bangladesh Taka has climbed by Tk23, or 26.75%, since March of last year.
Such a crisis in both the Taka depreciation and Foreign Exchange (Forex) reserve decrease has never been seen in Bangladesh's history.
Taka devaluation
Data from the central bank shows the dollar price was only Tk86 on March 22 of last year. The following day, the greenback began to strengthen.
The interbank dollar exchange rate has now reached Tk109, as set by the Bangladesh Foreign Exchange Dealers Association (Bafeda) and the Association of Bankers Bangladesh (ABB) on July 3.
Bangladesh's currency depreciated by Tk23 between March 2022 and July 2023.
In percentage terms, it has devalued by 26.75% during this time.
Solutions
To address the scarcity of greenback dollars, the central bank increased the sale of dollars to banks beginning in FY22 in order to keep the country's import sector operating normally. Finally, at the end of FY22, Bangladesh Bank sold a record $7.62 billion.
However, towards the end of FY23, Bangladesh Bank records reveal that the central bank surpassed the previous fiscal year's record by over double the margin.
This (dollar sale) is more than 78% higher than the previous fiscal year.
That is, at the conclusion of FY23, the central bank had sold $13.58 billion in dollars.
Impact on reserve
Such a historic level of sales of dollars by Bangladesh Bank BB has had a substantial influence on the foreign-exchange reserve.
Officially, the reserves stood at $31.202 billion at the end of June last year. Which was $41.82 billion at the end of FY22 and $46.39 billion at the end of FY21.
That means the central bank reserves will fall by $10.52 billion, or 25.39%, between June 30, 2022 and June 30, 2023.
However, for the fiscal year 2023, Bangladesh Bank only purchased $193 million from banks to replenish its depleted foreign-exchange reserves.
What the central bank says
Requesting anonymity, a central bank official told Dhaka Tribune: “Since last year after the Russia-Ukraine war started, to avoid the overshooting of exchange rates because of the shortfall of dollars on the money market, the Bangladesh Bank kept injecting the greenback into the banks.”
“On the other hand, such risinf sale of the dollar from the central bank put more pressure on the country's foreign-currency reserves already under stress because of increasing import costs,” the official added.
