Dhaka, Bangladesh (BBN) - Bangladesh’s gross foreign exchange reserves crossed the US$35 billion mark on Thursday, driven by stronger remittance inflows and lower import payment obligations, despite ongoing geopolitical tensions.
The gross forex reserves rose to $35.04 billion on the day, up from $33.87 billion the previous day, according to the central bank’s traditional calculation method.
Under the International Monetary Fund (IMF)’s Balance of Payments International Investment Poisson Manual-six edition, generally known as BMP6, the forex reserves stood at $30.37 billion during the period under review from $30.20 billion.
“Hefty growth in inward remittances has boosted overall foreign exchange inflows rather than outflows, despite the Middle East conflict,” a senior official of the Bangladesh Bank (BB) said, explaining the improvement in the forex reserves.
The flow of inward remittances grew by more than 21 per cent to $1.79 billion during April 01-15 this calendar year, up from $1.47 billion in the same period of last year.
The central banker also said the country’s overall import payment obligations remain relatively low, at around $6.0 billion per month, despite volatility in oil prices.
On the other hand, the central bank intervened into the forex market again on Thursday through purchasing $50 million through auction from four banks in the interbank spot market to keep the exchange rate of the US dollar against the local currency stable.
The amount was bought under the Multiple Price Auction method and the cutoff rate was BDT 122.75 per dollar, according to the central bank officials.
A day earlier, the central bank resumed dollar purchases after a six-week pause, signalling renewed intervention to stabilise the exchange rate of the US dollar against the local currency amid a surge in remittance inflows.
The central bank purchased $70 million on Wednesday from a Shariah-based bank in a similar auction.
The ongoing intervention is also contributing to a gradual strengthening of the country’s foreign exchange reserves, according to the officials.
“We’re purchasing the US dollars from banks directly to absorb the higher inflow of remittances,” another central banker said.
He also added that such intervention helps keep the exchange rate of the US dollar against the local currency stable, which in turn encourages both exporters and remitters.
The central bank of Bangladesh has so far bought $5.61 billion from banks directly since July 13 last under the prevailing free-floating exchange rate arrangement, the central bank’s latest data showed.
BBN/SSR/AD