11:05 am - Thursday February 23, 2017

Forex reserve crosses $19bn for first time

The reserves now stand at $19.04bn, enough to pay off six months’ imports and second highest among SAARC countries

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The foreign currency reserves yesterday crossed $19bn mark for the first time on the back of remittance inflow, strong export performance and decline in import payments.

The reserves now stand at $19.04bn, enough to pay off six months’ imports and second highest among South Asian Association for Regional Cooperation (SAARC) countries, says Bangladesh Bank in a statement.

“The reserves have reached such a new height due to remittances sent by expatriate Bangladeshis and rise in export earnings,” it said.

The other reasons behind the new milestone are fall in import of items like rice, fuel and luxurious goods, and stable taka exchange rate against the US dollar.

In the last three months, the forex reserve added $1bn and in the last four and a half year added $9bn, according to the statement.

Though the reserve is in comfortable zone, it is necessary to increase it further, as it ensures to achieve higher sovereign rating and attracts foreign investment, it said.

It said the record reserve was the result of the central bank’s various measures, including strengthening money laundering activities, giving some facilities for exporters and keeping greenback stable against taka.

Export earnings increased 15% to $17.5bn in the last seven months of the current fiscal year.

Remittances saw a growth of 5.3% in January this year. Bangladeshi expatriates remitted $1.25bn last month against $1.32bn a year ago.

The country’s import bills for major food grains have continued to fall during the first five months of the current fiscal year because of rise in rice production.

The import bill payment for rice and wheat in July-November of the current fiscal year fell by 37.83% to $296.48m from that of same period of the last fiscal year. On December 20 last year, the forex reserves crossed the $17bn mark for the first time in the history of Bangladesh.

Economists, however, said recently the forex reserve is rising due to the sluggish capital machinery imports that would ultimately affect manufacturing growth and thus limiting scope for employment.

Bangladesh Textile Mills Association recently demanded of Finance Minister AMA Muhith to take steps so the central bank lends them from the reserve for capital machinery imports.

In response, the minister discouraged them saying the central bank would not have the capacity to do that as they would have to finance the Padma Bridge project from the reserve.

A senior Bangladesh Bank executive said the government has a demand for around $2bn for the project, which the central bank would provide in exchange for taka.

News Source : Dhaka tribune


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