Forex reserve falls after ACU payment

Express (July 11, 2011)


Swelling import bills, coupled with the routine payment of the Asian Clearing Union (ACU), have again put the country's foreign exchange (forex) reserve under pressure, officials said Sunday.

Bangladesh has made a routine payment of US$837 million to the ACU against imports during May-June period of this calendar year.

The country's foreign exchange reserve fell to around $10 billion Sunday from $10.901 billion of the previous working day, following this payment.

"The country's foreign exchange reserve is now under pressure after making the routine payment to the ACU," a senior official of the Bangladesh Bank (BB) told the FE.

He also said the central bank has remitted the fund to the ACU headquarters in Tehran, in line with the existing provisions of the nine-member union.

The amount of payment declined to $837 million in the last instalment from $986 million earlier mainly due to decreased imports, particularly consumer goods, from other ACU member countries.

"We're importing different consumer items and raw materials from the ACU member countries, particularly from India, to meet their growing demand in the local market," the central bank official added.

Under the existing provisions, the outstanding amount of import bills and interest accruing on the same are settled at the end of every two months among the member countries.

The ACU is an arrangement among Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan, Sri Lanka and the Maldives through which intra-regional transactions among the participating central banks are settled on a multilateral basis.

The union started its operations in November 1975 to boost trade relations among the member countries. Bangladesh and Myanmar joined the union as the sixth and the seventh members in 1976 and 1977 respectively. Bhutan joined the ACU on December 9, 1999, and the Maldives from January 2010.

Meanwhile, the country's foreign exchange reserve has been facing pressure mainly due to a slower pace of remittance inflow and higher import payments, particularly for fuel oils, food grains and power plant equipment, the BB official said.