The dollar holdings of Bangladesh鈥檚 commercial banks increased in February, supported by a rise in remittance inflows and export earnings, according to Bangladesh Bank data.
In February, commercial banks鈥� gross foreign currency balance rose to $4,632 million, up from $4,537 million in January and $4,255 million in December.
The December figure marked the lowest level since June 2019, when balances stood at $4,191.18 million.
Bankers attributed the increase in dollar holdings over the past two months to a steady rise in remittances and export earnings.
During July-February period of the 2024-25 financial year, remittance inflows totaled $18.48 billion, reflecting a 22.63 per cent increase from that of $15.07 billion in the same period of the previous financial year.
Export earnings also experienced a robust year-on-year growth of 10.41 percent, reaching $32.93 billion during this period.
Another factor influencing the rise in dollar holdings was the central bank鈥檚 clearance of most foreign dues by December. This allowed banks to retain more foreign currency in January and February.
At the same time, the demand for dollars has weakened due to the current business climate.
The current economic crisis and nationwide unrest have also contributed to lower dollar demand, as many businesses have either cut back on raw material imports or shut down production since the political regime shift.
The decline in money laundering and informal hundi transactions has also contributed to dollar accumulation within the formal banking system.
Despite these developments, commercial banks鈥� dollar holdings have not increased significantly. Foreign direct investments have dropped sharply due to political instability, adding to the country鈥檚 economic challenges.
The Bangladesh Bank has stopped selling dollars to commercial banks to prevent further depletion of reserves while simultaneously purchasing dollars to stabilise the reserves. This approach has added further strain on the foreign exchange market.
The official foreign exchange reserves, as calculated under International Monetary Fund guidelines, have remained static at about $20 billion for the past six months.
The dollar price has surged to Tk 122 each, exacerbating inflation and increasing production and energy costs.
The exchange rate has steadily climbed from Tk 85.80 in December 2021 to Tk 104 in December 2022 and Tk 110 in December 2023.
Businesses have warned that continued depreciation of the local currency will further weaken consumer purchasing power and intensify the country鈥檚 economic distress.
