Bangladesh’s Forex Reserves Surge Past $35 Billion Milestone

In a significant show of economic recovery and fiscal resilience, Bangladesh’s gross foreign exchange reserves have once again surpassed the $35 billion mark. According to data released by the central bank, Bangladesh Bank, the reserves stood at $35.04 billion at the close of business on Tuesday.

This recovery mirrors a similar peak achieved in June 2020, though the underlying economic drivers differ substantially. While the 2020 surge was largely attributed to the stagnation of global trade during the pandemic, the current rise is being hailed as a result of structural reforms, a crackdown on illicit financial outflows (Hundi), and a robust increase in inward remittances.

Comparative Reserve Accounting

While the gross figure is a headline-grabbing $35.04 billion, the central bank also maintains reporting under the International Monetary Fund’s (IMF) BPM6 manual. This provides a more conservative estimate of “net” usable reserves.

Structural Reforms and Market Dynamics

The journey to this milestone has been volatile. After hitting an all-time high of $48 billion in August 2021, reserves plummeted due to widespread financial irregularities, loan scams, and money laundering during the previous administration. By the time the Awami League government fell on 5 August 2024, reserves had dwindled to just under $26 billion.

The Governor of Bangladesh Bank, Ahsan H. Mansur, had predicted in January that the $35 billion target would be reached within the 2025–26 fiscal year—notably without relying on IMF loan disbursements. This has been achieved through:

• Market-Based Exchange Rates: Transitioning away from a pegged currency to let the Taka find its market value (currently hovering around 120 BDT per Dollar).

• Aggressive Dollar Purchases: Bangladesh Bank has purchased over $5 billion from commercial banks this fiscal year to bolster the national coffers.

• Remittance Surge: In the first 23 days of February alone, $2.56 billion in remittances entered the country, a 23% increase compared to the same period last year.

The Road Ahead

Economic analysts suggest that while the current “stagnation” in new industrial investment has helped keep the reserves high by reducing the demand for import Dollars, the landscape is shifting. With a newly elected government in power, an uptick in the import of capital machinery and raw materials is expected.

The consensus among experts is that as long as money laundering remains curtailed and the investment climate fosters export-led growth, the current “Dollar crisis” will remain a thing of the past.