Stronger remittances, forex reserves and BoP boost Bangladesh’s external stability

Bangladesh's external sector has strengthened significantly on the back of three key developments -- a sharp rise in workers' remittances, higher foreign exchange reserves and a substantial improvement in the country's overall balance of payments.

The latest Bangladesh Bank (BB) data show that the country's overall balance of payments (BoP) moved into a US$6.61 billion surplus in FY2025-26, almost doubling from the $3.39 billion surplus recorded in FY2024-25.

The improvement has continued into the current fiscal year, with remittance inflows maintaining strong growth and foreign exchange reserves remaining above $37 billion in August.

Workers' remittances reached around $2.97 billion in August 2026, up around 22.5 percent from $2.42 billion in the same month of 2025.

The August inflow was also about 3.8 percent higher than the $2.86 billion received in July.

As a result, Bangladesh received around $5.83 billion in remittances during July-August of FY2026-27, nearly 19 percent higher than the corresponding period of the previous fiscal year.

The strong inflow follows a record performance in FY2025-26, when migrant Bangladeshis sent home around $35.59 billion, compared with $30.33 billion in FY2024-25.

Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said that the sustained growth in remittances is a positive sign for the country's external sector and reflects growing confidence among expatriate Bangladeshis in sending their earnings through formal banking channels.

He said the government and the central bank have been working to make formal remittance channels more convenient and attractive while discouraging illegal hundi transactions.

The six-month March-August period also recorded strong growth, with remittance inflows reaching $18.94 billion, up 13.1 percent from $16.74 billion in the corresponding period of 2025.

The improvement in remittance and the overall external position has helped Bangladesh Bank rebuild foreign exchange reserves.

Gross foreign exchange reserves stood at $37.35 billion at the end of August 2026, compared with $36.42 billion at the end of July and $31.17 billion at the end of August 2025.

Under the IMF's BPM6 methodology, reserves stood at $32.44 billion at the end of August, compared with $31.58 billion in July and $26.17 billion a year earlier.

Thus, gross reserves increased by around $6.19 billion, or nearly 20 percent, in one year.

Bangladesh Bank said the foreign exchange reserve position had followed a rising trend, with the sustained flow of inward remittances contributing to the accumulation of reserves.

The foreign exchange market has also remained relatively stable. Bangladesh Bank's transaction-based reference rate stood at Tk123.17 per US dollar at the close of September 23, while the end-August reference rate was around Tk123.21.

The relatively stable exchange market is significant because a narrower gap between formal and informal exchange rates can encourage migrant workers to use formal banking channels for sending money home.

The third major indicator is the overall balance of payments.

According to Bangladesh Bank, the overall balance recorded a $6.61 billion surplus in FY2025-26, compared with $3.39 billion in FY2024-25.

The improvement came despite a wider trade deficit and a current-account deficit.

The country's financial account recorded a surplus of about $7.9 billion in FY26, providing substantial support to the overall external balance.

The current account, however, remained in deficit at around $1.59 billion, compared with a deficit of $140 million in FY25.

Bangladesh Bank said the external sector remained stable despite the widening trade deficit, mainly because of strong remittance inflows.

The improvement in the external position has also coincided with a recovery in imports.

Bangladesh Bank data show that imports increased 10.07 percent in FY26, compared with 2.44 percent growth in FY25.

More importantly, imports of intermediate goods increased 15.19 percent, which the central bank said could support higher production and economic activity in the coming months.

Opening of import letters of credit also increased 6.60 percent during FY26, while settlement of import LCs increased marginally.

Chairman of NRBC Bank PLC Md Ali Hossain Prodhania said the composition of import growth will be important in determining its impact on the domestic economy, particularly whether higher imports are being driven by industrial raw materials, capital machinery and other productive inputs.

The stronger external position provides Bangladesh with a larger buffer for meeting import payments and external obligations, he added.

Bangladesh Bank's recent assessment said the foreign exchange market gained stability in FY26, supported by the overall BoP surplus, monetary-policy measures and a more market-oriented exchange-rate regime.

The central bank has also introduced several measures to strengthen the foreign exchange market. In August, it launched live operations of the Foreign Exchange Market (FXM) module for foreign-exchange intervention and interbank transactions.

The central bank has subsequently taken additional measures related to foreign exchange transactions, including facilities for offshore banking units and specialized foreign-currency transactions.

Ali Hossain Prodhania said the stronger remittance flow and reserve position are helping improve foreign-exchange liquidity and reduce pressure on banks to source dollars for import payments.

He said maintaining a competitive and relatively stable exchange rate, improving formal remittance services and expanding overseas employment markets would be important for sustaining the inflow.