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July 17, 2025

Bangladesh Bank’s foreign exchange reserves have seen a notable increase this week after the central bank bought nearly half a billion US dollars through its first-ever auctions with commercial banks—marking a strategic move to stabilise the currency market.

On Wednesday, central bank spokesperson Arief Hossain Khan confirmed that the BPM6-compliant reserves rose to $24.99 billion, while gross reserves reached $30.03 billion. A week earlier, on July 7, these stood at $24.45 billion and $29.52 billion, respectively.

“This reserve growth comes from the dollars we purchased in auctions. The auctions also help keep the exchange rate stable,” Arief said.

Historic Auctions Yield $484 Million

In a first-of-its-kind operation, Bangladesh Bank conducted two auctions this week—purchasing $171 million on Sunday and an additional $313 million on Tuesday, bringing the total to $484 million. The second day’s purchase was reflected in the reserves on Wednesday.

The auctions were conducted as part of the central bank’s broader strategy to support the exchange rate amid fluctuating demand and supply of foreign currency.

Market-Based Exchange Regime in Focus

To comply with IMF loan conditions, the central bank adopted a market-based exchange rate system on May 14, a move that initially did not affect dollar prices. However, over the past 10 days, the exchange rate has seen a mild downward adjustment.

Bankers attributed this trend to a rise in remittance inflows and export earnings, which have improved dollar supply in the market. At the same time, slower imports of capital machinery have lowered demand for the greenback.

To prevent excessive appreciation of the taka, the central bank entered the market as a buyer—paying slightly above market expectations to signal its intent to support rate stability.

Exchange Rate Movement and Strategy

According to Bangladesh Bank data, the dollar was traded at Tk 121.20 on Wednesday, compared to Tk 121.50 on Tuesday, Tk 120.10 on Monday, and Tk 121.20 on Sunday.

A senior central bank official said the auction mechanism will not be used on a daily basis, but will be employed selectively based on market dynamics.

“We won’t buy dollars every day. We will intervene via auction only when we deem it necessary based on market conditions,” he stated.

Reserves: Defined and Measured

Bangladesh Bank reports reserves under three classifications:

• Gross Reserves: Total foreign currency holdings.
• BPM6-Compliant Reserves: Calculated as per IMF guidelines.
• Usable Reserves: Available liquid assets for immediate use.

This week’s reserve boost is viewed as a positive signal for the external sector, particularly as the country works to build resilience amid ongoing fiscal reforms and global financial uncertainties.