The foreign exchange reserves of Bangladesh slipped to $36.97 billion on Wednesday for the first time in nearly three years, due to the central bank’s USD selling spree that began last fiscal year.

This figure stood at $46.62 billion in the same period last year. Forex reserves had fallen below the $40 billion mark last July as Bangladesh settled import payments worth $1.96 billion with the Asian Clearing Union (ACU).

A senior official of the central bank, on condition of anonymity, said the key reason behind the steady decline of forex reserves in the USD selling spree of the regulator. Despite allowing a floating exchange rate, the regulator is still selling USD to banks from its forex reserves.

During July 1 to September 21, the banking regulator sold over $3 billion to banks, a Bangladesh Bank official told The Business Post, adding that it is currently providing USD support to banks only for covering government import payments.

Bangladesh’s foreign exchange reserves rose to an all-time high $48 billion in August 2021, but declined by $8.67 billion to $39.36 billion in the same period this year due to the USD shortage, and the need for regulator support to stabilise the country’s forex market.

Data from the central bank shows that the country’s foreign exchange reserves rose gradually till August 2020. But the Covid-19 pandemic disrupted economic activities after March 2020, causing Bangladesh’s domestic production, investment and import demand to decline.