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Year EndER 2020

Forex reserves make history


Published : 28 Dec 2020 09:54 PM | Updated : 29 Dec 2020 08:11 PM

Despite a global economic recession caused by Coronavirus pandemic, the country's foreign exchange reserves have made a new history in 2020. 

The forex reserves have increased by almost $10 billion to stand at $42.59 billion for the first time till December 23 where this growth was only $2 billion in the previous five years.

However, the forex reserves were $30.16 billion in the FY 2015-16, $33.49 in the FY 2016-17, $32.94 billion in the FY 2017-18, $32.71 billion in the FY 2018-19, $35.85 billion in the FY 2019-20 respectively.

Experts said record growth of remittance inflows, moderate export earning and low import expenditure mainly helped to increase the reserves.

Besides, the government has taken time befitting initiatives to maintain healthy reserves, they added.

The reserves are adequate to cover about eight months’ import payment for the country of 160 million people, an economist said.

Within eight months, the reserves increased by almost $7 billion, the forex reserves crossed $34 billion, $35 billion, $36 billion, $37 billion, $38 billion, $39 billion, $40 billion, $41 billion and $42 billion-mark for the first time respectively following lower import payment pressure and steady growth of remittance inflow during the crisis, according to data provided by Bangladesh Bank (BB).

The previous highest reserves amounting to $33.68 billion was recorded on September 5, 2017.

However, remittance inflow increased to $10.90 billion between July and November, up 41.32 percent over the same period of previous year despite the Covid-19-induced ongoing global economic recession and fall in oil prices.

At the same time, imports decreased by 12.99 percent to $15.78 billion, and exports grew by 1.10 percent to $12.54 billion.

An official of Bangladesh Bank (BB) mentioned that timely initiatives were taken by the government at various times which apparently resulted in an increased awareness among expatriate workers to send their hard-earned money through legal channels, pushing up the remittance inflow. 

Besides, the higher growth of remittance inflow is attributed to a budget declaration of 2 percent incentive to remitters on inward remittance for the last fiscal year.

On the other hand, another BB senior official said that higher gold prices in the global market as well as lower import bills have helped increase the country's forex reserves recently.

Dr Atiur Rahman, former Bangladesh Bank governor, told Bangladesh Post, “The record monthly remittance received in the country’s history is actully helping push foreign currency reserves up to $42.59 billion that is good news for the country.

“The central bank has taken several initiatives including providing an easy system giving remittance to remitters as well as buying dollars directly from the market for a stable forex market, which encouraged expatriates to send money through legal channels helped to boost remittance inflow,” he added.

Shah Md Ahsan Habib, a professor of the Bangladesh Institute of Bank Management, said, “The forex reserve, a good indication for the economy, hits a record high, it is good news for the country without a doubt.

"The reserves are usually considered as the brand of an economy. The global community initially judges the financial strength of a country by examining the volume of its reserves," he said.

For utilizing reserves, the government has decided to use foreign exchange reserves for rapid implementation of productive projects to accelerate development work and recover from said Covid-19-induced economic losses, Finance Minister AHM Mustafa Kamal has recently said.

“In such cases, our money will remain within the country, won’t go out of the country,” he mentioned.

The Finance Minister hopes the forex reserves will reach $50 billion by 2021.