Reserves pressure and taka depreciation

Bangladesh's foreign exchange reserves fell from about 48 billion dollars in August 2021 to under 32 billion dollars by January 2023, and continued declining to roughly 22 billion dollars on a gross basis by December 2023, as a surge in import costs, a softer export performance, and slower remittance inflows all converged at once. The taka depreciated sharply over the same period, moving from around 86 per US dollar in mid-2022 to about 110 per US dollar by February 2024, a decline that financial press coverage citing Bangladesh Bank data linked directly to the widening gap between import demand and foreign-currency inflows. Bangladesh Bank responded with a mix of defensive measures, including delaying some foreign-currency payments, discouraging non-essential imports, tightening the ability of foreign firms to repatriate profits, and repeatedly adjusting its managed exchange-rate mechanism rather than allowing a single abrupt devaluation. The episode, which unfolded alongside a separate domestic banking-sector scandal, marked the most serious external-sector pressure Bangladesh had faced since its reserves had comfortably covered many months of imports through most of the 2010s.