Dhaka, Bangladesh (BBN)- Bangladesh is witnessing a gradual erosion of its foreign-currency buffers amid a sudden fall in export earnings and rising external payments, sparking concerns over potential pressure on the country’s current-account balance.
Officials and economists attribute the recent decline in surplus foreign-currency inflows mainly to growing import settlements, even as remittance inflows show moderate growth.
The country had maintained a steady surplus of over $1.0–2.0 billion since May 2025, thanks to lower import settlements. However, since September, import payments have picked up pace, dragging the surplus down to nearly $1.0 billion.
According to Bangladesh Bank (BB) data, total foreign-currency earnings from remittances and exports stood at $6.30 billion in October, while import settlements reached $5.41 billion, leaving a modest net inflow of just $0.97 billion.
In comparison, the net inflow in May was $2.10 billion, as $7.70 billion came from remittance and exports against $5.60 billion in imports.
The BB data also show surplus inflows of $1.58 billion in June, $1.21 billion in July, $1.20 billion in August, and $0.55 billion in September.
A central bank official, seeking anonymity, said remittance growth has slowed while exports continue to fall and imports are gathering momentum.
“So, the benefit from export-plus-remittance over import is getting squeezed, which is concerning for the economy that recently saw significant improvement in the balance of payments,” the official told media.
The official also warned that if the current trend continues, the country could soon face a current-account deficit.
Dr. Zahid Hussain, former lead economist at the World Bank’s Dhaka office, reportedly said rising domestic demand without foreign financing could increase market pressure.
“The country needs to raise the supply of foreign exchange — this is the ultimate solution,” he noted, adding that the central bank builds up reserves through dollar purchases to stabilize the exchange rate.
He suggested that the regulator could ease any future market volatility by selling dollars and that the government could bolster reserves further through budget-support funds from the World Bank and IMF.
Explaining the economic situation, Dr. M. Masrur Reaz, Chairman of Policy Exchange Bangladesh, said the central bank has allowed all kinds of imports in recent months after lifting restrictions amid a strong inflow of foreign exchange.
“Economic activities are slowly rebounding. To sustain this, the relaxation in imports should continue,” he told The Financial Express (FE), warning that the recent fall in exports needs careful analysis and corrective measures.
Despite these concerns, central bankers remain optimistic about a rebound in forex reserves. Bangladesh’s gross foreign-exchange reserves stood at $32.71 billion on Thursday, buoyed by higher remittance inflows, officials said.
Reserves are expected to stay above $31 billion next week even after the settlement of $1.60 billion in import-payment obligations with the Asian Clearing Union (ACU) member countries.
“We expect the country’s gross forex reserves to reach around $34 billion within the first week of February 2026 if the current trend continues,” another BB official said, citing central bank projections.
He also said around $800 million had been added to the reserves over the past two months following the last ACU payment.
Earlier, on September 7, reserves stood at $30.30 billion after clearing $1.50 billion in ACU payments for July–August 2025.
Meanwhile, the central bank has started the process of settling $1.60 billion in import payments with ACU member countries for September–October, which is expected to reflect in the reserves figure by Sunday or Monday next week, another BB official confirmed.
BBN/SSR/AD