Commercial banks’ holdings of dollars fell to about $3.7 billion in October, the lowest in five years, as central bank purchases and rising import payments pulled down their foreign currency balances.
Bangladesh Bank data showed banks’ gross foreign exchange holdings dropped from $4.61 billion in the same month a year earlier and from $3.93 billion in September.
The last time balances were this low was in October 2019.
Senior treasury officials at several banks said the fall happened even though foreign currency inflows improved over the past year because of higher remittances and stronger export receipts.
However, banks’ dollar holdings squeezed for meeting import payments and selling to the central bank through auctions.
Since July, the central bank has bought more than 2 billion dollars from banks under a multiple price auction system at rates between Tk 121.5 and Tk 121.9 per dollar.
The move was intended to rebuild reserves and keep the interbank rate steady at about Tk 122.
The dollar was trading at Tk 122.7 in the market on November 25.
The central bank stepped in after the rate slipped to Tk 119 in June.
Officials at Bangladesh Bank said that the intervention restored stability in the foreign exchange market and helped ensure that remittances continued through banking channels.
Remittances rose to a record $30.32 billion in the last financial year, up nearly 27 per cent from the previous year.
Between July and October, the inflow reached $10.14 billion, up more than 13 per cent year on year.
Monthly receipts have been above $2 billion since August last year.
Export earnings grew by 8.6 per cent to $48.3 billion in FY25, according to the Export Promotion Bureau.
Earnings in the July to October period stood at $16.08 billion, slightly higher than the same period of the previous year.
Imports also began to pick up as essential goods demand rose.
Letters of credit worth $69 billion were opened in FY25 compared with $66.7 billion a year earlier.
LC openings increased by nearly 10 per cent to $17.82 billion dollars in July to September.
Bankers said the gradual rise in imports along with the central bank’s dollar buying pushed down banks’ foreign currency balances further.
They said many banks preferred to sell dollars to the central bank because of limited avenues to use foreign exchange for private investment and overseas payments.
They also pointed to the narrowing difference between the official exchange rate and informal hundi rates, which encouraged migrant workers to send money through banks.
Bangladesh Bank officials said shifting from selling dollars to buying has helped rebuild reserves.
Reserves reached $26.37 billion on November 24 under IMF calculation standards. The traditional figure stood at $31.08 billion.