Forex buffers rebound after import shock

Bangladesh's banks have rebuilt foreign exchange buffers after a Ramadan-driven import surge briefly drained dollar liquidity, with the latest data showing easing pressure on currency positions.

According to the central bank, banks' net open position (NOP), a key measure of foreign currency exposure, climbed to $1,080.70 million on April 2, recovering sharply from $602.71 million in February, when higher import payments weighed on positions.

The rebound follows a steady strengthening trend over the past two years. NOP stood at $107.03 million in June 2023, rose to $272.70 million in June 2024, and peaked at $1,116.70 million in June 2025, indicating a significant build-up in banks' ability to manage FX risk before the recent seasonal pressure.

Market liquidity, reflected in banks' net FX holding, shows a similar pattern. Dollar liquidity fell to $2.30 billion in February amid increased import demand but has since recovered to $3.39 billion, suggesting a rapid restoration of balance in the interbank FX market.

Officials said the February dip was largely seasonal, driven by higher import payments during Ramadan, and does not indicate structural weakness in the banking system's foreign exchange position.

The quick turnaround highlights improved liquidity management and policy support, though it also underscores the system's sensitivity to import-driven shocks in a still-tight external environment.

Analysts note that stronger FX buffers can help stabilise the currency market and reduce volatility, but sustained stability will depend on continued inflows and disciplined demand management.