Forex reserve falls below $40b after two years

Foreign exchange reserves in Bangladesh have slipped below $40 billion after September 2020, as the Bangladesh Bank (BB) cleared the import payments to the Asian Clearing Union (ACU).

The country settled import payments worth $1.99 billion with the ACU last week, that's why the reserves stood down to $39.80 billion on Tuesday for the first time in nearly two years, a high official of the central bank confirmed the information.

The ACU is an arrangement through participating countries like Bangladesh,

Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are to settle import payments for intra-regional transactions. Its headquarter is situated at Tehran in Iran. The central banks of the ACU member's countries have to make the payments every two months.

According to the central bank data, in September 2020 the reserve position was $39.31 billion and it stood at $48.06 billion in August last year, which was the highest in the country's history.

After the ease of the pandemic, the import payment has risen as the economy has turned around and the Ukraine-Russia war has pushed up prices of commodities in international markets.

In the July-May period of FY22 import payment increased 39.03 per cent to $75.40 billion compared to the same period of previous financial year. As a result, the reserves position fell from $48 billion in August last year to $41 billion on May 10 this year. Now it is lower than $40 billion.