Bangladesh Bank (BB) has significantly ramped up its efforts to stabilise the dollar market in the outgoing fiscal year 2022-23, selling $13.5 billion, nearly double compared to $7.62 billion in the previous fiscal year.
On the last working day of the fiscal year, the central bank injected an additional $46 million into the market, aimed at stabilizing the US dollar's value.
The month of June witnessed a surge in remittance inflows, with commercial banks reporting around $2 billion in the first 25 days. This is a slight increase compared to earlier months and a significant 52 percent increase compared to the same period last year when expatriates sent $1.33 billion back home.
Bangladesh’s foreign exchange reserves recently crossed the $31 billion mark, partly due to around $1 billion in donations from development agencies and an unexpected surge in remittances.
However, the effectiveness of selling dollars to stabilize the reserves has been questioned by experts. Dr. Ahsan H. Mansur, the executive chairman of the Policy Research Institute (PRI) and former IMF staff, expressed concerns regarding the fundamental issues in the market. He pointed out that the demand for dollars exceeds the inflow and that the financial account has been under pressure for a long time.
“Bangladesh Bank tried to portray a net reserve of $24 billion to the International Monetary Reserves (IMR) by June 30 at any cost. We see that the central bank bought dollars from private banks to make the adjustment,” Dr. Mansur told the Daily Sun.
The country’s foreign exchange reserves had reached a peak of $48.35 billion in August 2021, but declined to $29.75 billion in mid-June this year.