The Bangladesh Bank has sold record $5.47 billion to banks since July of the current financial year due to a severe dollar crisis that hampered letter of credit payment obligation settlement.

On Wednesday, the foreign reserve dropped to $34.25 billion after the BB sold $60 million at Tk 97 each.

According to the suggestion of the International Monetary Fund, if $8 billion used as export development fund is excluded from the foreign exchange reserve, the reserve stands at $26.3 billion. It is the lowest in seven years.

In addition to dollar sales, the reserve fell such a level as the BB on November 7 paid import bills worth $1.32 billion to the Asian Clearing Union for the month of September and October.

The ACU payment is made at a two-month interval.

The BB sold over $5.47 billion to banks in between July 1 and November 9 while in the whole year of 2021-22, it injected total $7.62 billion into the financial market, according to the BB data.

The state-run banks, in particular, are taking dollar support from the BB for settling import payments of the Bangladesh Petroleum Corporation, the Bangladesh Agricultural Development Corporation and Bangladesh Chemical Industries Corporation and others.

The reserve was $39.06 billion on August 31, 2022 and $46.2 billion in September 2021.

Settling high import payments was the main reason for the depletion of the forex reserve, BB officials said.

They said that imports were surging amid rising commodity prices, global supply chain disruptions and the Russia-Ukraine war.

The country’s import payments increased to $19.34 billion in July-September from $17.32 billion in the same months of the past year.

The trade deficit widened to $7.54 billion in the July-September period compared with that of $6.77 billion in the same period in the past financial year.

Amid increasing balance of payments pressure and falling foreign exchange reserve, the government requested financial support from the International Monetary Fund in July.

Remittance and export earnings are prime tools for the bankers to meet the demand for dollars, but both are falling, the BB officials said.

The central bank had to inject dollars due to the severe shortage of the greenbacks on the financial market.

The exchange rate rose sharply to Tk 107 from Tk 84.8 against the US dollar within a year.

The BB approved floating rate of dollars on September 14.

Amid the import surge, demand for dollars on the local market soared, which prompted the country’s banks to buy greenbacks from the central bank to settle import payments.