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Bangladesh’s current account deficit has widened further due to a fall in export earnings and inward remittances, creating more pressure on foreign exchange reserves.
Bangladesh Bank (BB) data showed that September’s deficit was $3.6 billion, almost twice as much as August’s $1.5 billion.
A current account deficit indicates that a country imports more than it exports.
A BB official said the central bank has continued to support banks with opening letters of credit for importing ‘essential items’ despite the pressure on foreign currency reserves.
“Remittance inflows should not be justified by monthly data alone. Remittances continued to grow during July-August,” Abul Kalam Azad, executive director of Bangladesh Bank, told the Daily Sun.
According to market analysts, the current account deficit may increase to $16.5 billion in the current FY 2022-23. Remittances reached $1.52 billion in October, the lowest in eight months. BB reported that remittances dropped $14.1 million in a month as the banking channel brought in only $1.53 billion in September.
According to data released by the Export Promotion Bureau, October exports decreased 7.85 percent year-on-year to $4.36 billion, missing the target by nearly 12.9 percent.
Syed Mahbubur Rahman, former Chairman of the Association of Bankers Bangladesh (ABB), believes the dollar market might improve by January-February after banks settle international trade bills.
According to Syed Mahbubur, managing director of Mutual Trust Bank, if remittances and export earnings increase in the next quarter, the pressure on the dollar will drop over time.
Due to the US dollar crisis, the central bank has sold $4.89 billion from the reserves since the beginning of the current financial year.
August’s inflation rate hit a 12-year high of 9.5 percent. In September, it dropped slightly to 9.1 percent. The negative effects of inflation have begun to subside on the country’s economy. The central bank directed banks to collect expatriate income and remittances at 107 Tk per dollar.
(DS)
