The country’s foreign exchange reserves increased by 727 million dollars in a span of five days. Reserves rose to $21.3 billion on Monday (March 4) on the back of increased remittance flows and currency swaps between banks.
According to the data of Bangladesh Bank, on February 28, the gross reserve in BPM-6 system was 20.57 billion dollars. According to the data, on Monday (March 4) the money market exchanged currency equivalent to 100 million dollars.
A senior official of Bangladesh Bank said that more than 2 billion dollars of remittances came in February. This may also lead to an increase in gross reserves. Moreover, currency swaps are constantly taking place with banks. This can also be a reason.
Experts say there is no balance between where the reserve money comes from and where it is spent. As a result, reserves could not be maintained. The trade deficit has narrowed slightly as the Bangladesh Bank controls imports. However, there are concerns about how long it will be possible to hold this way.
The central bank has given currency swap to commercial banks from February 15 this year. Since then the system has started contributing to the reserve.
Banks are exchanging dollars from their Nostro accounts (accounts of domestic banks abroad) through currency swaps, due to which Bangladesh Bank has been able to increase its gross reserves.
Dollars that will come in through currency swaps will not contribute to increasing net reserves. Because currency swaps are short-term. Net reserves are calculated by deducting short term liabilities from gross reserves.
Bangladesh Bank has given more than 6.5 thousand crores of rupees to the banks in exchange of about 600 million dollars till the end of February to face the liquidity challenge.
