Forex reserves to drop to $30bn after paying $1bn ACU import bill

Business Desk :
The pressure on Bangladesh’s foreign currency reserve will mount further as the Bangladesh Bank is set to clear import bills amounting to over $1 billion to the Asian Clearing Union (ACU) within the next few days.
With this payment to settle the import bills through the ACU mechanism, the forex reserve would go down to $30 billion, sources said.
As of April 27, the country’s foreign currency reserve was over $31.06 billion, the Bangladesh Bank (BB) data showed.
The ACU is an arrangement through which the member countries settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.
Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the Tehran-headquartered ACU.
The member countries of the union clear their payments every two months.
The significant fall in reserve, particularly the greenback, is deemed as a matter of serious concern for the economy, which is facing difficulties to meet the NIR (net international reserve) target of $24.46 billion within June, as set by the International Monetary Fund (IMF).
The central bank has sold $11.65 billion from the reserve from July 2022 to April 25, 2023 to the commercial banks to facilitate their LC settlement.
However, the Bangladesh Bank sold $7.62 billion to the commercial banks in the previous FY22.
According to the Bangladesh Bank, the gross volume of foreign currencies, held by the country’s commercial banks, increased further to $5.34 billion in March from $5.24 billion in February.
According to the central bank, the opening of LCs against consumer goods dropped by 15.99% in the last nine months (until March 2023), whereas that of intermediate goods dropped by 30.91%, capital machinery by 55.88%, industrial raw materials by 31.16%, and machinery for miscellaneous industries by 44.99%.