Bangladesh’s foreign exchange reserves have climbed above $29 billion this month, marking the first time the central bank’s reserves have reached this level since it began reporting under the International Monetary Fund’s (IMF) updated framework.
As of today, Bangladesh Bank (BB) reported reserves at $29.47 billion, up from $29.23 billion recorded on February 5. This is the highest level since July 12, 2023, when the BB started calculating reserves using the IMF’s Balance of Payments and International Investment Position Manual (BPM6). The BPM6 framework is designed to reflect the reserves that are readily available to cover import bills and other international obligations.
What’s Driving the Rebound?
The gradual replenishment of reserves has been underway for over a year, largely supported by:
- Rising remittances, which have strengthened foreign currency inflows.
- Moderated import demand, which has reduced pressure on the country’s external accounts.
- Central bank dollar purchases, which have helped stabilize the exchange rate.
The recovery began after the fall of the Awami League government in August 2024, when remittance inflows surged.
Gross Reserves at a Near Two-Year High
Bangladesh Bank also reported that gross reserves have reached $34.06 billion, the highest level since November 2022. The central bank’s strategy of buying US dollars from banks to build reserves played a key role in the rebound.
Earlier, the BB had been selling dollars to support the taka’s value. However, at the start of the current fiscal year, it reversed course and began purchasing dollars from the interbank market. In the current fiscal year alone, the BB bought $4.3 billion through transparent auctions to strengthen its reserve position.
Central Bank Policy Outlook
In its monetary policy statement for January–June, the BB said it will continue to prioritize exchange rate flexibility, leveraging strong remittance inflows and improved reserves to shield the economy from external shocks.
A Look Back at the Reserve Decline
Bangladesh’s gross reserves had peaked at over $48 billion in August 2021, driven by strong inflows during the pandemic. However, reserves later fell sharply as imports surged following the lifting of COVID-19 restrictions and global commodity prices rose amid the Russia-Ukraine conflict.
By May 2024, total reserves had dropped to $24 billion, before the recent recovery began.