Bangladesh's foreign exchange reserves are expected to be around $18.22 billion after settling import bills with the Asian Clearing Union (ACU) today. This is a decrease from the $19.82 billion reported on May 8. The decrease is due to settling import bills for the March-April period.

Central bank sources say the dollar crisis has led to a significant decrease in imports over the past two years. This decrease, however, has not been enough to offset the outflow of dollars exceeding the inflow, resulting in a decline in reserves.

The higher import bill for March-April compared to January-February is due to increased spending during Ramadan and Eid, according to central bank sources. Bangladesh paid $1.6 billion in import bills for March-April, compared to $1.29 billion for January-February. This contributed to the decrease in reserves from $20 billion to $19.82 billion.

The ACU acts as a settlement system for import payments among its nine member countries, including Bangladesh. It facilitates regional trade by clearing import bills every two months.

Bangladesh's import activity, as reflected by Letters of Credit (LCs), has been low. In March 2023, the value of LCs opened for imports was less than $6 billion, which has only happened three times in the past year. This suggests a potential decrease in import volume.

Bangladesh's imports have declined significantly this fiscal year, as shown by the decrease in settled Letters of Credit (LCs). This decrease is likely due to a shortage of US dollars.

According to Bangladesh's central bank, private and public entities settled $44.31 billion worth of LCs in July-February FY24. This is a 13.93% decrease compared to $51.48 billion in the same period last year.

This fall in net reserves puts Bangladesh below the target set by the International Monetary Fund (IMF) for a $4.7 billion loan package. The IMF requires Bangladesh to have net reserves of $14.76 billion by June, down from a previous target of $20.10 billion.