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Bangladesh Balance of Payments Updates (Forex Reserve, Remittance, FDI, Balance of Trade, etc.)

bluesky

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The government will struggle to teach multiple languages so let us start with English which is the most useful.
Language skill must be tied to the destination of the workers. People usually go to Arab countries where English has little place. You are talking about a widespread English teaching without first knowing which countries would take them. I do not think our people can get jobs in Europe just because they speak English.

We must concentrate our efforts instead of talking futuristic under a widespread language education.
 

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Forex reserve crosses $43b

The country's foreign exchange reserves yesterday hit a new record of $43.17 billion thanks to the upward trend of remittance and lower import payments, Bangladesh Bank data showed.

The reserves, one of the major macroeconomic indicators of an economy, touched the $41 billion mark on October 28 and rose to $42 billion on December 15.

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The reserves stood at $32.68 billion in December last year. This means Bangladesh's foreign exchange has increased more than $2.1 billion this month.

Between July and November, remittance earnings rose to $10.90 billion, up 41.32 per cent year-on-year. The rally of remittances has also kept its pace this month, making a large contribution to the foreign exchange reserve.

Remittance stood at $1.91 billion in the first 29 days of December in contrast to $1.59 billion in the same period a year ago.

"This is surely a very good news for Bangladesh before the start of a new year," Finance Minister AHM Mustafa Kamal said in a statement released by his ministry yesterday.

This is another milestone, which portrays the economic stability of Bangladesh, he said.

Remittance has played a vital role in boosting the foreign exchange reserves amid the ongoing coronavirus pandemic, the minister said.

"I would like to express my gratitude towards the expatriates, who worked hard and helped the government achieve the milestone under the strong leadership of Prime Minister Sheikh Hasina.

Remittance has been on the rise riding on the stagnation of the global 'hundi' cartel, an illegal cross-border financial transaction.

The hundi cartel has been rendered ineffective across the globe due to the restrictions on movement imposed by countries to limit the spread of the coronavirus.

But the decrease in imports has also helped to push the reserve in recent periods.

Imports declined by 8.84 per cent to $20.24 billion at a time when exports grew by 0.86 per cent to $15.52 billion.

The three indicators -- remittance, imports and exports -- have elevated the reserves to record highs following the outbreak.

https://www.thedailystar.net/business/news/forex-reserve-crosses-43b-2019997
 

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Remittance hits $21.7b, an all-time high

remittance_1.jpg

AKM Zamir Uddin

Remittance hit an all-time high of $21.74 billion last year as migrant workers continued to use formal channels sidestepping the hundi system to send home massive amounts of money.
Last year, the inflow posted a magnificent growth of 18.59 per cent compared to that in the previous year, showed data from the central bank.


Migrant workers remitted $2.05 billion in December, meaning that the inflow crossed the $2-billion mark for the fourth straight month.
The increasing trend has given a boost to government confidence in managing the macro-economy in times of crisis.
The country's foreign exchange reserve has already surpassed the $43 billion mark riding on the upward trend of remittance, a development that will help the government use the foreign exchange reserve on a rainy day. The reserve stood at $32.38 billion in March last year when the coronavirus hit the country.
Experts hope that the trend would be maintained until at least the end of the pandemic given the global economic scenario and the initiatives taken by the government.
They, however, said that there was no scope to pinpoint any reason behind the increase in remittance as this was quite an unusual phenomenon from the perspective of the global scenario.
Although the country's workforce export came to a halt in April last year because of the pandemic, remittance has kept the ball rolling.
Between January and March last year, 181,218 Bangladeshi citizens went abroad, according to data from the Bureau of Manpower, Employment and Training (BMET).
No data is available on the BMET website for April onwards.
On an average, the country sends 7 to 8 lakh people abroad as workforce per year.
As much as 700,159 workers went to different countries on job appointments in 2019.
The stagnation of hundi, an illegal cross-boundary financial transaction, has pushed the country's remittance up, said Zahid Hussain, a former lead economist at the World Bank's Dhaka office.
The act of sending workers to foreign nations has almost come to a stop due to the ongoing business slowdown, he said.
"The financial transaction for the export process of workers is usually settled through hundi," he said.
In addition, money laundering through imports has been almost brought to an end in recent months, he said.
A vested quarter usually dodges taxes by way of under-invoicing while settling imports, Hussain said.
Imports have nosedived in recent months as businesses have adopted a go-slow policy in setting up new industrial units or expanding existing ones.
Imports decreased 8.84 per cent year-on-year to $20.24 billion in the first four months of fiscal 2020-21.
Remittance may decrease to some extent when the pandemic comes to an end as the global hundi cartel will witness a revival, Hussain said.
He, however, said the pandemic would help a large number of migrant workers get accustomed to the formal channel for the transfer of their hard-earned money.
This will play a positive role in increasing remittance in the days to come, he said.
"But, the government will have to lay great emphasis on exporting manpower abroad in order to keep remittance inflow stable," Hussain said.
This was echoed by Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.
A good number of migrant workers will not go back to the hundi system after the pandemic as they now feel secured and comfortable by way of using the formal channel, he said.
The platforms of mobile financial service (MFS) and agent banking are gradually turning into pivotal centres for transferring money from foreign nations, he said.
"Along with the migrant workers, some expatriate Bangladeshis, who run businesses abroad, may also have transferred funds to the country as part of their portfolio investment," he said.
A portfolio investment is an ownership of a stock, bond, or other financial assets with the expectation that it will earn a return or grow in value over time, or both.
It entails passive or hands-off ownership of assets as opposed to direct investment, which would involve an active management role.
"Many countries in North America and Europe have already entered into the deadlock of a zero per cent interest rate. A country usually will take several years to get rid of such a situation," Mansur said.
This has also created a deflation in the countries in the two continents.
Given the experiences of countries that had earlier faced deflation, an economy requires at least three to four years for the moribund state of affairs to fade away.
So the Bangladeshi diasporas now send money as the interest rate on deposit products offered by local lenders is much higher than those in the countries they are now based in.
Mansur went on to express hope that the upward trajectory of remittance will continue for at least four to five months.
But, remittances from the western nations may continue flowing in for the next three to four years given the zero per cent interest rate prevailing there.
Restrictions on cross-boundary travels has also pushed remittance up, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.
The 2 per cent cash incentive introduced by the government in 2019 has also encouraged the expatriate Bangladeshis to send more money through the formal channel, he said.

 

Destranator

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$43b reserve again after a month
ECONOMY
TBS Report
04 February, 2021, 09:55 pm
Last modified: 04 February, 2021, 10:01 pm

Bangladesh has the capacity to meet the import cost of eight and a half months
remittance.jpg

Photo: Collected

The country's Foreign exchange reserves have again exceeded $43 billion – for the second time.
On 29 December, the reserves touched the $43 billion milestone for the first time. On that day, the reserves stood at $43.17 billion.
The reserves reached $43.02 billion on 4 February.
The reserves fell to $42 billion on January 7. At that time, $1.27 billion from the reserves was spent on imports.
The amount of reserves is increasing due to the flow of high remittances sent by expatriates and lower import costs as compared to last year.
In the first seven months of the current financial year (July-January), remittance inflows have increased by more than 35% compared to the same period of the previous financial year.
On the other hand, in the six months of July-December, the import expenditure has decreased by about 6% as compared to the same period of the previous year.
Despite the rise in foreign exchange reserves, the exchange rate has remained stable as the central bank continued to buy dollars from the market.
Although there is a risk of inflation due to the increased supply of extra money in the market, the central bank said that there was little risk of inflation due to the increase in flow of money as people's income has declined due to the ongoing corona pandemic.
Commenting on the issue, economist Ahsan H Mansur told The Business Standard that there was little risk of non-food inflation, because reduced income will decrease consumer spending outside of food.
However, he feared that the current turmoil in the rice market will lead to higher food inflation.
He said rice is a big part of the food list of the people of Bangladesh. As a result, rice prices have a large share in the inflation measurement basket.
Due to the strong position of the reserves, Bangladesh has the capacity to meet the import cost of eight and a half months.
Economists say the impact of Covid-19 has led to lower private investment and lower consumer spending, which has led to lower import costs.
Finance Minister AHM Mustafa Kamal has expressed hope that the reserves will exceed $50 billion by this year. He recently said that a decision on whether the reserve money would be used for government projects will be taken before the coming budget.
 

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Bangladesh forex reserves cross $44bn milestone

2021-02-24 23:54:32
Chief Economics Correspondent, bdnews24.com

featured-image

Bangladesh’s foreign exchange reserves have crossed another milestone on the money sent by migrant workers amid the coronavirus pandemic.
The reserves at Bangladesh Bank stood at all-time high of $44.028 billion after Wednesday’s transactions.
The amount is sufficient to pay import bills for over 11 months.
The reserves crossed $43 billion for the first time on Dec 30 last year, but dropped below $42 billion when the country cleared the import bills to Asian Clearing Union in the first week of January this year.
With boosted remittances continuing to flow in, it took less than two months to cross another milestone.
Central bank officials think that the reserves will remain above $44 billion until Bangladesh pays the import bills again in early March.
On Feb 3 last year, Bangladesh’s foreign currency reserves were $32.45 billion, which means the reserves increased by $11.58 billion in a year.
Despite the pandemic and lockdown measures across the globe, the expatriates sent $2.6 billion remittances in July year, the highest for a month.
In January this year, the country received $1.96 billion in remittances with an around 20 percent year-on-year rise. The growth was almost same in the first 23 days of February when the migrant workers sent nearly $1.45 billion.
Increased foreign loans also played a role in the boosting foreign reserves. The foreign loans grew 12.08 percent to $2.88 billion year on year in the July-December period of last year.
Meanwhile, import costs dropped in the six months by 6.8 percent.


 

Destranator

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Remittance up 33.5pc

world-bank-studies.jpg

World Bank studies show that remittances alleviate poverty in lower- and middle-income countries. Photo: STAR/FILE
Star Business Report
Remittance increased 33.51 per cent year-on-year to $16.68 billion in the first eight months of this fiscal year. The inflow since June last year was characterised by robust growth every month in context to that a year ago.
But in a sequential monthly comparison the inflow has been gradually declining since October. However, it is still not that much of a matter of concern as February's growth is much higher than that of the same period one year earlier.


Expatriate Bangladeshis sent $1.79 million in February, up 22.61 per cent year-on-year, showed Bangladesh Bank data.
Migrant workers might have sent more money to support family members during the coronavirus pandemic, said a Bangladesh Bank official.
Many migrant workers lost their jobs when the host countries imposed lockdowns to contain the deadly virus, which might have compelled the migrants to send all their assets back home.
The hundi system, an illegal cross-border money transfer system, has come to a halt because of the restriction on movement and this might have taken remittance to a new high.
The trend would continue until at least when an end is declared of the pandemic, given the global economic scenario and the initiatives taken by the government.
Remittance may decrease to some extent when the pandemic is declared to have ended as the global hundi cartel will witness a revival, said another central bank official.
He, however, said the pandemic would help a large number of migrant workers get accustomed to the formal channel for the transfer of their hard-earned money.
This will play a positive role in increasing remittance in the days to come, he said.
"But the government will have to lay great emphasis on exporting manpower abroad in order to keep remittance inflow stable," he said.
Restrictions on cross-boundary travel has also pushed remittance up, he said.
The 2 per cent cash incentive introduced by the government in 2019 has also encouraged the expatriate Bangladeshis to send more money through the formal channel, he said.
Riding on the strong remittance inflow, the country's foreign exchange reserve stood at $44.12 billion as of March 1.

 

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Risingbd Online Bangla News Portal

Bangladesh’s forex reserves reach record $46 bn

News Desk || risingbd.com
Published: 21:30, 29 June 2021

Bangladesh’s forex reserves reach record $46 bn


The country’s foreign exchange reserves witnessed a new record crossing the $46 billion amid the Covid-19 pandemic.
The reserves of Bangladesh Bank (BB) stood at $46.082 billion on Tuesday (June 29), according to sources of the central bank.
According to sources, the country’s foreign exchange reserves have crossed $46 billion for the first time. At the end of the day on Tuesday (June 29), the reserves stood at $46.082 billion. Earlier, it crossed $45 billion mark on May 3.

Dhaka/NF/AKA

 

Destranator

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Reserves forces increase in money supply in a country and therefore inflation. Only way to stop it it to raise interest rates. That will impact industrial growth.

BD economy is particularly susceptable to this problem due to our highly specialised export basket in this time of pandemic. Reserves are good as long the economy is operating normally but in a pandemic this is a liability. Think of it like this.... you dont have a job because you are sick, but the bank is forcing you to take loans. Its great you have loads on money in the bank but you can not go out to spend it and no means of paying back the interest that is accruing.

China and india are not comparable countries due to differing dynamics.
Hey @mb444, thinking back, I believe what you said above could be part of the reason why BB is forced to keep interest rates so high.
 

mb444

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Hey @mb444, thinking back, I believe what you said above could be part of the reason why BB is forced to keep interest rates so high.


Yeap, it is a factor. High reserves has the same impact as printing money, its inflationary.

BoB need to invest this on overnight/short loans on the international money markets. Reserves are just sitting there fairly unutilized. BoB would not have sat on Taka like that, only doing this because its hard currency.

Our problem is the size of our economy which is fairly small so the effect of reserves are magnified because per capita the value of our reserves is quite small at around $270-$280pp which is not a lot.
 

Destranator

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Yeap, it is a factor. High reserves has the same impact as printing money, its inflationary.

BoB need to invest this on overnight/short loans on the international money markets. Reserves are just sitting there fairly unutilized. BoB would not have sat on Taka like that, only doing this because its hard currency.

Our problem is the size of our economy which is fairly small so the effect of reserves are magnified because per capita the value of our reserves is quite small at around $270-$280pp which is not a lot.
I see your point. Another way of looking at it:
BD nominal GDP: $365 bn (very likely inflated by BBS)
Forex reserve: $46 bn

That means the forex reserve alone has resulted in cash worth 1/8th (taking BBS GDP data at face value) of the GDP being injected into the economy.
 
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bluesky

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That means the reserves alone has resulted in cash worth 1/8th (taking BBS GDP data at face value) of the GDP being injected into the economy.
Yes, $46 billion worth of BD Taka is now circulating through the economy causing it to chase only a few goods as only a few consumer or industrial goods are produced in the country. No wonder, asset prices have become so high.

BD economy is sick with excessive liquidity because BoB has bought these dollars by paying in Taka that are moving among the garments-related people and the families of those who sent remittances.

However, this big money is chasing only a few goods produced/ available in the country causing price inflation and a bubble economy.
 

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Forex reserves improve slightly, stand at $42.30 billion​

FE ONLINE DESK | Published: May 22, 2022 16:42:49 | Updated: May 22, 2022 20:15:00
Bangladesh’s foreign exchange reserves have improved a little to stand at $42.30 billion, which was at $41.92 billion on May 10.
"Recently, the reserve of foreign exchange was a slight dip below the $42-billion mark, but after that, the reserve was crossed US$42 billion again and today it is $42.30 billion," said General Manager of the Forex Reserve and Treasury Management Department Saiful Islam said, reports BSS.
According to bdnews24.com, a slight dip below the $42 billion mark recently was enough to make analysts nervous as the economy has already been suffering from sluggish inward remittances and skyrocketing inflation in the last quarter of the ongoing fiscal.

The central bank and the economists are saying that the decline of COVID-19 cases was met with a global hike at the prices of commodities as the Russia-Ukraine war caused the supply and delivery costs to go up. As a result, the demand for the US dollars rose and the Bangladeshi taka, like many other currencies in the world, began losing value.

Meanwhile, the higher dollar expenditure for imports and other necessities is putting pressure on the foreign exchange reserves. Bangladesh had a record $48.02 billion in August last year, sufficient to pay import bills for up to one year, but a steady decline has brought it down to the current level.

To stabilise an already dwindling economy and a currency market, a phenomenon some economists are calling “crisis at both ends”, the central bank has devalued the taka against the US dollar last week, for the third time in two months.

The US dollar exchange rate for interbank transactions was revised down by Tk 0.80 to Tk 87.5, but several banks hiked dollar prices to around Tk 92-94 amid heightened demand.

The central bank has also toughened its policy for importing luxury and non-essential items like sports-utility vehicles, washing machines, air conditioners and refrigerators.

It had ordered the banks in April to keep the cash margin at 25 per cent for letters of credit to import the non-essential products after the country’s trade deficit kept widening, posting a 64 per cent rise to around $25 billion year on year in the first nine months of the current fiscal year.

As import costs continued to rise, the Bangladesh Bank last week ordered the banks to raise the cash margin for the imports of cars and electronic home appliances. For imports of other non-essential products, the margin was set at 50 per cent.

Simultaneously, the government has also taken several measures- like putting a bar on civil servants’ foreign tours and pausing the development of projects that require a large number of imported materials.

Besides, the government has offered expatriate Bangladeshis to invest unlimited amounts of money in the dollar bond. But since the government needs to pay the interest in dollars, it has lowered the interest rate to reduce the dollars going out of the country.

All these measures were evidently not enough to calm an edgy currency market, as the value of the US currency last week shot up further past the Tk 100 mark, the highest in Bangladesh’s history.

The government aims to keep inflation within 5.3 per cent this fiscal, but it rose to 6.22 per cent at the end of March, according to official data. Some economists posited the rate has been much higher.

The International Monetary Fund, or IMF, does not agree with Bangladesh Bank on how it reports its dollar reserve.

In an assessment last year, when the reserve was at $44 billion by end of last fiscal, the IMF said the central bank overstated its foreign exchange reserves by $7.2 billion through the inclusion of non-reserve assets underestimating related risks, leading to an inflated foreign reserve.
 

bluesky

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FE reserves are now around $26 billion. I fear more fall in the reserves by next April to June. The more the dollar falls, the more the Taka value depreciates.

I will not be surprised if in April a single dollar buys Tk200. I predicted Tk 120 per dollar about one year before. It has reached that level. No don’t, the value of Taka will depreciate further.
 

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FE reserves are now around $26 billion. I fear more fall in the reserves by next April to June. The more the dollar falls, the more the Taka value depreciates.

I will not be surprised if in April a single dollar buys Tk200. I predicted Tk 120 per dollar about one year before. It has reached that level. No don’t, the value of Taka will depreciate further.
its now somewhere between 25.5 sir

The Bangladesh Bank sold $71 million to the banks on Wednesday, said its spokesman Abul Kalam Azad.

The selling of dollars by the central bank in the first five months of this fiscal year increased to $6.05 billion.

Amid the dollar crunch, the taka has lost its value by 24 per cent against the US dollar over the last one year.
 

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FE reserves are now around $26 billion. I fear more fall in the reserves by next April to June. The more the dollar falls, the more the Taka value depreciates.

I will not be surprised if in April a single dollar buys Tk200. I predicted Tk 120 per dollar about one year before. It has reached that level. No don’t, the value of Taka will depreciate further.

AL is spreading propaganda through their media that global crude oil price is lowest in 11 months.

I don't know if this is true or not. According to AL, global inflation will disappear like morning darkness!

Kuley eshey bhoradubi ke chai ?

I don't think AL believes that we will be subject to a recession, although EU and US will be. :lol:

All AL leaders are issuing Alga Momen type statements nowadays.

Desperation for hanging on to Gaddi is just hilarious....
 

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