Bangladesh’s foreign currency reserves are gradually recovering after a sharp decline in recent years, driven by rising remittance inflows, increasing exports, and a crackdown on hundi transactions.
The country’s gross foreign currency reserves reached $26.51 billion by the end of Tuesday, with $21.18 billion recorded under the IMF’s BPM6 accounting standards. This marks a notable rise from the $19.70 billion reported on March 9, following a $1.75 billion payment to the Asian Clearing Union (ACU) for January-February imports.
According to central bank officials, the resurgence is due to several factors including a significant uptick in remittance through formal channels and a surge in export earnings. The authorities attribute the reduction in illicit financial flows—particularly through hundi—to stricter banking regulations and targeted messaging to expatriate communities.
The remittance inflow hit a record $3.29 billion in March, the highest ever for a single month. As a result, commercial banks began selling surplus dollars to Bangladesh Bank, strengthening the reserve further. Additionally, March exports grew by 11.44% year-on-year, reaching $4.25 billion, according to the National Board of Revenue (NBR).
Executive Director and Spokesperson of Bangladesh Bank, Arif Hossain Khan, confirmed that banks are now cautiously opening letters of credit (LCs), helping prevent over-invoicing and under-invoicing, which had previously fueled capital flight. He added that remittances are now being routed more through legal channels, especially after the government warned families of overseas workers that land purchases made with untraceable funds could trigger scrutiny.
Mosleh Uddin Ahmed, Managing Director of Shahjalal Islami Bank, said, “Despite ongoing pressure from growing foreign debt obligations, the reserve is holding steady, which is a positive sign.” He noted that another $1.5 billion ACU payment is due next month, which may cause a temporary dip, but the overall trend remains stable due to strong remittance and export performance.
Liberty News’ economic correspondent states that the market is also benefiting from a more stable exchange rate, reversing months of depreciation pressure, which further supports reserve recovery. With Eid-ul-Adha approaching, remittance is expected to rise further, boosting the foreign reserve outlook in the coming months.
LND/BG
