Foreign exchange reserves rose to $21 billion

Increase in remittance flows

Bangladesh's foreign exchange reserves witnessed a notable increase, reaching $21.15 billion, as reported by Bangladesh Bank sources on Thursday, March 7. This surge was attributed to the rise in remittance flows and ongoing currency swaps between banks.

Recent Developments

As of March 4, the reserves stood at $20.85 billion, marking a positive trend. However, concerns were raised about a potential decrease in reserves after the payment of over one billion dollars by the Asian Clearing Union (ACU) in the coming week.

Historical Context

In August 2021, Bangladesh's foreign exchange reserves reached a historic high of $48 billion. During this period, various measures, including foreign loans, contributed to the increase. Subsequently, the central bank sold over $29 billion amid a crisis, causing the reserves to decline to $19.30 billion by the end of November. Despite fluctuations, the reserves rebounded to $21.86 billion in December, only to decrease again to $19.96 billion by the end of January 2024.

Recent Surge Factors

A senior official from Bangladesh Bank highlighted that remittances exceeding $2 billion were recorded in February, contributing significantly to the increase in gross reserves. Additionally, ongoing currency swaps between banks were identified as another contributing factor to the current surge.

Outlook and Concerns

While the recent increase in reserves is positive, concerns have been raised about the anticipated decrease after the Asian Clearing Union's payment in the coming week. It remains crucial for policymakers to monitor and manage these fluctuations effectively to ensure the stability of Bangladesh's foreign exchange reserves.

In conclusion, Bangladesh's foreign exchange reserves have experienced a notable upswing due to increased remittance inflows and active currency swaps between banks. The resilience and responsiveness of Bangladesh's economic policies will play a crucial role in navigating potential challenges and maintaining a stable economic outlook. Continued vigilance and strategic planning are recommended to address any uncertainties in the global economic landscape that may impact the country's foreign exchange reserves.