The dollar holdings of Bangladesh’s commercial banks increased for the third consecutive month in March, due mainly to a sharp rise in remittance inflows and export earnings, according to Bangladesh Bank data.
In March, commercial banks’ gross foreign currency balance rose to $5,114 million, up from $4,632 million in February, $4,537 million in January and $4,255 million in December.
The December figure marked the lowest level since June 2019, when balances stood at $4,191.18 million.
Bankers attributed the increase in dollar holdings over the past three consecutive months to a sharp rise in remittance inflows and export earnings.
From July 2024 to March 2025 of the 2024-25 financial year, remittance inflow totalled $21.78 billion, marking a 27.6-per cent increase from $17.07 billion in the same period of FY24.
Remittance inflow remained above $2 billion consecutively from August 2024 to February in FY25, which crossed $3 billion in March.
Bangladesh’s export earnings increased by 10.63 per cent to $37.19 billion in the first nine months or July-March period of the current financial year 2024-25 compared with those of $33.61 billion in the same period of FY24, according to Export Promotion Bureau data.
Another factor influencing the rise in dollar holdings was the central bank’s clearance of most foreign dues by December. This allowed banks to retain more foreign currency in the last three months.
At the same time, the demand for dollars has weakened due to the current business climate.
The current economic crisis and nationwide unrest have also contributed to lower dollar demand, as many businesses have either cut back on raw material imports or shut down production since the political regime shift.
The decline in money laundering has also contributed to dollar accumulation within the formal banking system, bankers said.
They said that the reduction in rate gap between official banking channel and informal hundi market was one of the key factors behind the remittance surge.
Previously, a substantial difference between open market and interbank dollar rates prompted many migrants to use informal channels.
The interbank exchange rate rose to Tk 122 a US dollar in March, up from Tk 110 in December 2023 and significantly higher than Tk 106 in June 2023 and Tk 93.45 in June 2022.
The Bangladesh Bank has stopped selling dollars to commercial banks to prevent further depletion of reserves while simultaneously purchasing dollars to stabilise the reserves.
The country’s foreign currency reserve, according to the International Monetary Fund guidelines, increased to near $21.17 billion on April 15 from $20.38 billion at the end of March.
