Usable forex reserves stands at $15.82 billion

Central bank sources confirmed to The Business Standard that net reserves fell by $3.7bn.

TBS Report

28 November, 2023, 02:45 pm

Last modified: 28 November, 2023, 03:05 pm

Representational image.
Photo: Dmytro Demidko on Unsplash

“> Representational image. 
Photo: Dmytro Demidko on Unsplash

Representational image.
Photo: Dmytro Demidko on Unsplash

Bangladesh’s net (useable) foreign exchange reserves now stand at $15.82 billion, following a depleting trend since the Ukraine-Russia war broke out. 

According to a report of the central bank, the country’s reserve amount on 23 November stood at $19.52 billion based on the Balance of Payments and International Investment Position Manual (BPM6), 

However, the net reserves will be $3.7 billion less than the total reserve amount, central bank sources confirmed the data to The Business Standard.

In July, Bangladesh started calculating its foreign reserve according to a formula suggested by the International Monetary Fund – BPM6.

Following the new calculation, the country’s gross foreign exchange reserves dropped by $6.44bn to $23.56bn. 

The IMF introduced the BPM6 manual in 2012, but the central bank did not comply with it fully, which helped its forex reserves look higher than actual, prompting the government to use it for different infrastructural projects.

According to BPM6 calculation, the Bangladesh Bank has to exclude foreign currency loans to local banks, known as the Export Development Fund (EDF); deposits with state-owned local banks; deposits with the IDB Group; fixed-income securities below investment grade; a loan to Sri Lanka; and other foreign currency assets in non-convertible currencies from its previous gross reserves figure to come to the actual reserves figure.

Bankers had said the Russia-Ukraine war, which began in March 2022, would lead to higher costs for the energy, consumer goods and transport sectors.

As a result, Bangladesh would also experience higher import costs similar to other countries. 

While import costs surged, the country’s remittance flow did not spike upward, putting pressure on the reserves.

This article was originally published by a . Read the Original article here. .