Trade deficit rose by three times in July-September

The foreign exchange market sees mounting pressure as trade deficit rose by three times in the July-September of the current fiscal year compared to the same period last year. 

The trade deficit rose to $6.50 billion in the July-September period of the current fiscal year, from $ 2.04 billion during the same period last fiscal year. 

The trade deficit increased by 58% in one month from August to September, according to the Bangladesh Bank data released on Tuesday.

The declining trend of remittance in recent months also contributed to the widening trade deficit. 

Remittance receipts in October dropped 21.65% year-on-year to $1.64 billion despite an upward trend in the country's trade and commerce activities amid the improving pandemic situation.

The Bangladeshi diaspora had sent home $2.10 billion in October last year.

The total amount remitted by Bangladeshi expatriates in the July-October period of the current fiscal year was $7.05 billion, which is a 20% drop year-on-year, according to data released by the Bangladesh Bank on Monday. 

However, export earnings has been increasing gradually and saw a big jump in October giving a relief to the Bangladesh Bank in managing the forex market. 

Bangladesh has recorded its highest ever single-month export earnings amounting to $4.72 billion in October, thanks to a strong rebound in demand for apparels in western countries ahead of the festive season and supply disruptions from key competitors that saw fresh waves of pandemic.  

The export receipts surpassed the $3.46 billion target set for the month, registering a whopping 60.37% year-on-year growth, according to provisional data of the Export Promotion Bureau (EPB) released on Tuesday.

Apparel shipment grew by 53.27% to $3.56 billion year-on-year in October, raising the total export earnings to $15.74 billion in the first four months of this fiscal year.

The rising trade deficit put pressure on the current account balance. 

The current account balance declined by 82% in one month in September from August. 

In July-September of current fiscal year, current account balance stood at negative $2.31 billion from surplus of $3.48 billion in the same period of the last fiscal year. 

Meanwhile, the country's foreign exchange market has been on the rise for the past few months. Although the central bank has so far sold about $2 billion according to the demand of Scheduled Banks, the demand and price of all foreign currencies in the domestic market is increasing.