The Bangladesh Bank has set a critical economic goal: to increase the nation’s foreign exchange reserves to approximately $40 billion by June 2026 to stabilise the local currency and bolster economic confidence. While this target is ambitious, recent trends show momentum.
The country’s gross foreign exchange reserves were approximately $31.94 billion as of early October 2025. Under the International Monetary Fund’s (IMF) stricter Balance of Payments and International Investment Position Manual (BPM-6) methodology, the figure was $27.12 billion.
For all latest news, follow The Daily Star’s Google News channel. The recent momentum reflects both market response and coordinated efforts. Record remittance inflows have played a major role, with the central bank’s reforms, including a move toward a more market-aligned exchange rate, encouraging expatriates to use formal banking channels over informal systems like hundi.
The export sector, led by ready-made garments and supported by growing contributions from pharmaceuticals and agro-processing, has also remained resilient.
Meanwhile, funds from the IMF, Asian Development Bank (ADB), and World Bank have injected crucial liquidity, helping to stabilise the external account.
Despite this progress, Bangladesh faces a difficult path fraught with internal and external threats.
One major hurdle lies in the transition to a more flexible, market-based exchange rate regime. While the Bangladesh Bank initially adopted a crawling peg and has since allowed greater flexibility, the gap between official and unofficial exchange rates remains a long-standing concern. For years, the BB sold US dollars from reserves to support the taka’s value, directly contributing to reserve depletion. The success of the current policy hinges on its ability to truly unify the exchange rate.
Deep-rooted financial mismanagement also poses a serious risk. Internal challenges like money laundering and illicit financial flows significantly undermine reserve accumulation. Practices such as over-invoicing of imports and under-invoicing of exports are key mechanisms used to funnel foreign currency out of the country. These actions directly diminish the official foreign exchange stock and require stringent oversight and enforcement to curb them.
External factors add another layer of difficulty. Global economic instability continues to pose significant headwinds. Imported inflation, triggered by surges in global commodity prices, particularly for fuel and food amid geopolitical tensions, has inflated Bangladesh’s import costs, draining foreign currency reserves.
At the same time, a slowdown in major economies could reduce demand for Bangladeshi exports, weakening a vital source of foreign exchange earnings.
On a positive note, the Balance of Payments (BOP) recorded a surplus in the last fiscal year 2024-25. This improvement was driven not only by the current account, thanks to remittances and exports, but also by a strengthening of the financial account. The financial account has recently shown a robust surplus due to positive shifts in capital flows.
The journey to reaching $40 billion in reserves by June 2026 is ultimately a test of policy credibility and external financing consistency. While Bangladesh benefits from two resilient pillars, remittance and export growth, the outcome depends largely on mitigating internal leakages and sustaining recent improvements in capital inflows. The newfound financial account surplus offers a necessary buffer to finance debt obligations and help build reserves, but it remains fragile.
This surplus must be viewed with caution; it is easily reversible if foreign investor confidence is shaken by policy uncertainty or domestic financial instability.
The writer is principal & CEO of Sajed Meer Chartered Accountants
