Scheduled import payment causes forex reserves to plunge below $30bn

Business Desk :
Pressure on Bangladesh’s forex reserves continued to mount as the Bangladesh Bank cleared import payment amounting to $1.18 billion through the Asian Clearing Union (ACU) mechanism on Sunday, causing the reserves to drop below $30 billion-mark.

After the clearance of import liabilities, the country’s reserves stood at $29.77 billion as of May 7.

The ACU is an arrangement through which the member countries settle payments for intra-regional transactions among the participating central banks on a net basis.

Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the ACU.
The member countries of the Tehran-headquartered union clear their payments every two months.

The significant fall in the reserve, particularly the greenback, comes as a matter of 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 over $12 billion from its reserve to the commercial banks from July 2022 to May 7, 2023 to facilitate them settle LCs.

However, the BB sold $7.62 billion to the commercial banks in the previous FY22.

The gross forex reserve reached a record high of $48 billion in August 2021 since when the BB started injecting the greenback into the forex market, as the banks began facing its shortage due to growing import payments, triggered by the economic recovery from the Covid-19 crisis.