Bangladesh's Forex Reserves Decline After ACU Payments

Bangladesh's foreign exchange reserves have decreased following a record $2.01 billion payment to the Asian Clearing Union (ACU) for May and June import bills. This payment caused the total reserves to fall to $29 billion, or $2,952 crore, on Monday, down from $31 billion, or $3,171 crore, last Wednesday. According to the International Monetary Fund's (IMF) BPM6 methodology, reserves now stand at $2,445 crore.

Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan confirmed this information on Tuesday, stating that the $2.01 billion was paid to the ACU against import liabilities.

Due to high growth in remittances and loans from various international organizations, Bangladesh's gross foreign exchange reserves had climbed to $31.72 billion at the end of June, the highest in the last 28 months. Prior to this, reserves had dipped below $32 billion in early March 2023, then reached a high of $31.29 billion on March 15 of that year, generally remaining below $31 billion otherwise.

Alongside the increase in gross reserves, reserves calculated under the IMF's BPM6 methodology also reached $26.69 billion, the highest recorded since the central bank began publishing data according to this method in June 2023.

The ACU is an inter-regional payment settlement system among several central banks in Asia. Through this mechanism, import-export transactions between its nine member countries (Bangladesh, India, Iran, Nepal, Pakistan, Sri Lanka, Myanmar, Bhutan, and Maldives) are settled every two months. Transactions with other countries are settled instantly.

According to relevant sources, a primary reason for the recent reserve growth has been strict controls on money laundering. The reduced tendency for hundi (informal money transfer) led to remittances surpassing the $30 billion milestone for the first time in the last fiscal year. In the 2024-25 fiscal year, expatriate earnings amounted to $30.33 billion, an increase of approximately 27% compared to the previous fiscal year.

Furthermore, the government has received over $5 billion in low-interest loans from various sources, including the IMF, World Bank, and ADB. The combined effect of these factors has kept the dollar market stable at BDT 122 to 123, which stakeholders say is contributing to inflation control.