Country’s foreign exchange reserve has increased and stood at $32.20 billion on 11 December this year, $849.57 million or 2.71 percent higher than that in the same period of the previous year. This figure was $31.35 billion in same period of 2018. Market analysts have attributed the rise to the country’s steady remittance growth.
They said the country’s remittance inflow witnessed a remarkable growth during July-November in fiscal year 2019-20 for the government’s several steps including cash incentive for remitters. However, the remittance inflow stood at almost $7.71 billion during the time, according to the Bangladesh Bank (BB). This inflow increased by 22.70 percent comparing the same period of time last year, which was$6.28 billion.
Adel Haque, former BB joint director, told Bangladesh Post that if the country has strong foreign exchange reserves, it will be more capable of paying import bills, which will ultimately help raise its rating. Initiatives of the government and Bangladesh Bank to encourage expatriate Bangladeshis to send money through formal channel have played a crucial role in pushing the remittance, thereby, the foreign currency reserves up, bankers said.
Moreover, higher remittance growth coupled with the government’s time-befitting initiatives have helped stabilise the market by reducing pressure on foreign exchange reserve, they added. Bangladesh Bank (BB) has provided more than $300 million in current fiscal year support to the commercial banks in an effort to stabilise the foreign exchange market, otherwise reserve will increase further, BB sources said.
In light of huge crisis of greenbacks to meet higher import payments, the central bank has been providing very good support to commercial banks, and it will continue in the upcoming days, officials said. On Sunday, the exchange rate of US dollar was quoted at Tk 84.90. In span of one year, the local currency depreciated by Tk 1 to Tk 84.90 against US dollar.
However, the forex reserve was $32.27 in January, $33.23 in February, $31.78 in March, $32.12 in April, $31.34 in May, $32.71 in June, $32.09 in July, $32.77 billion in August, $31.83 billion in September, $32.43 billion in October and $31.72 in November in 2019 respectively.
Earlier, the foreign exchange market faced huge pressure to meet higher import payment for buying capital machinery to be used in government development schemes, a BB source said.
According to BB, the central bank has sold US dollar directly to the commercial banks to meet higher import payments on a regular basis.
Eminent economist and former BB governor Dr Salehuddin Ahmed said that “The country’s forex reserve has witnessed fluctuation between $31 billion and $33 billion for several years.” This is mainly for higher import payments against moderate remittance inflow and export earnings, he added.
Ahmed envisages, “Stopping unnecessary imports, giving necessary incentives to exporters, and encouraging expatiates to send more remittance will help boost the foreign exchange reserves further.”
