Dollars held by Bangladesh鈥檚 commercial banks hit a more-than-two-year low in October, driven by a severe shortage of the foreign currency in the country.
In October 2024, the gross foreign currency balance with the banks dropped to $4,981 million from $6,174 million in the same month of the past year.
This marked the lowest level since October 2022, when it stood at $4,505.60 million.
The level also decreased from $4,981 million in September, $5,265 million in August and $6,088 million in July.
Bankers attributed the decline to several factors, including the central bank鈥檚 payments of about $1.5 billion to foreign companies through the interbank dollar market, which drained the banks鈥� dollar reserves.
Additionally, the central bank apparently halted dollar sales to commercial banks to prevent further depletion of its foreign exchange reserves, they said.
Therefore, the rise in remittance inflows and exports in recent months have failed to raise banks鈥� dollar holdings.
Besides, increased import payment obligations made it difficult to hold foreign exchange reserve at a certain level.
Foreign direct investments also fell during this period amid nationwide unrests and political upheaval in the country.
The remittance inflow for the July-October period of FY24 rose to $8.93 billion, up from $6.87 billion in the same period of FY23.
Bangladesh鈥檚 export earnings during the same period increased to $15.79 billion from $14.25 billion in FY24.
Over the past three years until FY24, the central bank sold more than $34 billion to commercial banks, depleting its own reserves.
These dollar sales had reduced the foreign exchange reserves of the Bangladesh Bank and created a liquidity crisis in the banking sector.
Many import payments have been delayed or renegotiated due to the dollar shortage, giving banks more time to acquire the necessary foreign currencies.
However, the burden of the shortage is not evenly distributed among banks.
Only a few banks hold a significant portion of the country鈥檚 dollar reserves, while many others struggle to meet their customers鈥� demands for foreign currency.
The shortage of dollars is straining the country鈥檚 ability to pay for imports and has weakened the Bangladeshi taka.
The the exchange rate jumped Tk听120 from Tk 91 against the US dollar within a couple of years.
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