Bangladesh’s foreign currency reserves increased by $377 million in a week to $20.57 billion, according to central bank data.

This rise follows two weeks of growth after the bank initiated currency swaps with commercial banks.

The currency swap program allows banks to exchange local currency for US dollars from the central bank for short periods. This helps the central bank meet reserve requirements set by the International Monetary Fund (IMF) as part of a loan program.

The central bank has only sold dollars from its reserves to cover import bills for state-owned businesses.

Bangladesh’s foreign reserves have been under pressure in recent years due to rising import costs and lower remittance inflows. The situation worsened in 2022 due to global price hikes and supply chain disruptions.

To help banks manage record import bills, the central bank used a significant portion of its reserves, causing them to fall by half in two years. This led to Bangladesh falling below the IMF’s minimum reserve target.

However, there are signs of improvement. Export earnings reached a record high in January, and remittance inflows are also rising. Industry experts are hopeful that the foreign exchange crisis will ease in the coming months.