Foreign currencies held by commercial banks in Bangladesh are on the decline due to high demand, indicating growing pressure on the country’s external sector.

The leading banks will arrange a dinner for expatriate Bangladeshis at New York LaGuardia Airport Marriott

Offshore banking is increasingly becoming a key window for banks in Bangladesh to facilitate investments and international trade by attracting deposits in foreign currencies.

Commercial banks witnessed a drop in foreign currencies last month from that in the preceding month mainly due to a sharp fall year-on-year in the inflow of remittance and a relatively small growth in export earnings.

Almost all major foreign currencies like the European Union’s euro, British pound sterling, Chinese renminbi, Japanese yen and Indian rupee are following in the footsteps of the US dollar in becoming stronger against the local currency. 

Bangladesh plans to cut public foodgrain imports in the next fiscal year in an effort to save foreign currencies and avoid putting further pressure on the already strained forex reserves. 

In June last year when Finance Minister AHM Mustafa Kamal placed the budget in parliament, inflation had already been creeping up and the foreign currency reserves were on the decline. These two had derailed the full economic recovery from a two-year crisis wrought by the Covid pandemic.

Bangladesh has cut its reliance on the global markets for lifesaving vaccines as a number of local manufacturers are producing quality jabs, saving a significant volume of foreign currencies, industry people say.  

Exports and remittances, two major sources of foreign currencies for Bangladesh, plunged in April, a bad omen for the economy as it deals with multiple challenges, including a dollar crisis, an elevated level of import costs and falling reserves.