Foreign Currency Reserves Reach Historic Forty-Three Month High

Bangladesh has received a total of 1 billion dollars in budget support loans from the Asian Development Bank (ADB). Following the arrival of this financial assistance, the country’s gross foreign currency reserves increased significantly, reaching 35.63 billion dollars on Sunday. According to official central bank metrics, this figures represents the highest level of gross foreign currency reserves recorded in Bangladesh over the last 43 months.

Although the national reserves had crossed the 35 billion dollar threshold on a few occasions recently, they had not escalated to this specific level. On the preceding Thursday, the gross reserves were documented at 34.59 billion dollars. This marks a substantial financial recovery compared to the period surrounding the fall of the Awami League government, during which gross reserves had depleted to 25.92 billion dollars.

International Monetary Fund Accounting Framework Metrics

In tandem with the gross reserves data, the central bank also calculated the national reserves based on the Balance of Payments Manual 6th Edition (BPM6) accounting methodology framework designated by the International Monetary Fund (IMF). Under the BPM6 calculation format, Bangladesh’s foreign currency reserves stood at 31.07 billion dollars on Sunday.

This development represents the first instance where the country’s reserves calculated under the IMF system have risen above the 31 billion dollar mark. Prior to this milestone, the BPM6 reserves had crossed the 30 billion dollar threshold for the first time on 19 January of the current year.

The central bank initially started calculating and publishing its formal reserves data using the international BPM6 accounting method in June 2023. At that particular point in time, the reserves under this specific metric were reported at 24.75 billion dollars.

Historical tracking records reveal that the highest foreign currency reserves in the history of Bangladesh crossed the milestone of 48 billion dollars in August 2021. However, due to several distinct economic factors, including an increase in money laundering, the reserves began to deteriorate rapidly from that peak. Simultaneously, the exchange rate of the US dollar escalated significantly, rising from a rate of 84 Taka per dollar to surpassing 120 Taka. By the time the Awami League administration fell, the reserves under the BPM6 accounting framework had dropped to 20.48 billion dollars before initiating the current upward trajectory.

Record Remittance Inflow Drives National Reserve Recovery

The sustained recovery and present comfortable state of the national foreign currency reserves are largely driven by a high and continuous flow of inward remittances arriving via official banking channels. This upward trend in banking remittances has been recorded consistently since August 2024.

During the current financial year up until 10 June, Bangladesh received a cumulative total of 33.96 billion dollars in remittance earnings. This volume is higher by 5.50 billion dollars, reflecting an increase of 19.31 per cent, compared to the exact same period of the previous financial year.

Furthermore, during the entire preceding financial year, total inward remittances recorded an annual growth rate of approximately 27 per cent, establishing a solid foundation for the stabilization of national reserves.

Prior to this period of growth, the country’s reserves had been experiencing a prolonged and continuous decline. The reserves had previously fallen below the 35 billion dollar mark in the first week of November 2022. Following that period, the reserves continued to fall consistently until reaching the floor of 25.92 billion dollars at the time of the Awami League government’s departure. The current financial turnaround enabled the country’s reserves to finally cross back into the 35 billion dollar territory in November of last year, leading directly to the 43-month high achieved on Sunday.