Bangladesh Economy: News & Updates

[scot]

I want to see BD cruise wid double digit GDP growth rate.

 

[Gyp 111]

Two aircraft to be added in Biman fleet in 2014, Faruk tells JS


Civil Aviation and Tourism Minister Muhammad Faruk Khan today told the House that two aircraft Boeing 777-300ER will be added in the Biman Bangladesh Airlines fleet in 2014, reports BSS.

"Two more aircraft Boeing 737-800 will also be added in the Biman fleet in November-December in 2015," he said replying to a written question from treasury bench member Nur-un-Nabi Chowdhury.

The minister said, "We have a plan to bring four more aircraft Boeing 787-8 with latest facilities in 2019-2020."

He told the House that the government has taken a two-year strategic plan and 10-year business plan to make Biman as a profitable sector.

Besides, the government will shutdown operation of DC-10 from Biman fleet in November-December 2013, he said adding Biman already cancelled operation of F-28.

The government will bring two turboprop aircraft for domestic and regional route, Faruk said.

He said the government will increase aircraft for Biman fleet to 16 from 8 within 2014-2015 and the number of aircraft will be at 30 within 2023-2024.

Replying to another question from Nasimul Alam Chowdhury, the minister said Biman signed an agreement with Boeing company for buying 10 new aircraft, of which two 777-300ER added in the Biman fleet in 2011.

He said Biman has introduced call centre for providing better services to its customers.

To another question from treasury bench member AN Mahfuza Khatun Baby Maudud, Faruk said Biman has a ten-member governing body and each member of the board receives Taka 5,000 for each meeting.

Two aircraft to be added in Biman fleet in 2014, Faruk tells JS :: Financial Express :: Financial Newspaper of Bangladesh

 

[Gyp 111]

Govt in deal with Aga Khan network

The government has signed a protocol with the Aga Khan Development Network (AKDN) to expand cooperation with one of the world’s largest private development groups.

The visiting Chairperson of the network Prince Karim Aga Khan, also the spiritual leader of the 15 million Shia Ismaili Muslims, and Foreign Minister Dipu Moni singed the protocol at the Prime Minister’s Office on Monday.

According to the Ministry of Foreign Affairs, the protocol would enable the Network to operate in Bangladesh with its 10 wings, nine of which are not-for-profit.

Aga Khan Foundation, Aga Khan Health Services, Aga Khan Planning and Building Services, Aga Khan Education Services, Aga Khan Academies, Aga Khan University, The University of Central Asia, Aga Khan Trust for Culture, Aga Khan Agency for Microfinance, and Focus Humanitarian Assistance are the non-profit wings.

Aga Khan Fund for Economic Development is a profitable venture.

The Network has been working in Bangladesh with different NGOs since 1980.

Aga Khan arrived in Dhaka on Monday morning on a two-day visit on the government’s invitation and met with the President, Prime Minister, Finance Minister and Foreign Minister after paying respects to the Liberation War heroes at the National Memorial in Savar.

He also placed wreaths at the portrait of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman at Bangabandhu Memorial Museum.

The Foreign Minister received him at the airport.

During his meeting with the President at Bangabhaban, the Ministry of Foreign Affairs in a media release said, the issues of mutual interest were discussed, particularly on Aga Khan Network’s engagement in the areas of higher education, vocational and technical education, health, and agriculture.

The Prime Minister at her meeting with the prince expressed the hope that his academic institutions would offer “science-centric, technology-based education to young Bangladeshi minds – for them to serve emerging local and global markets”.

He will leave Dhaka on Tuesday noon.

Govt in deal with Aga Khan network - bdnews24.com

 

[Skies]

Delhi dangles ‘power diplomacy’ carrot
Print Edition

Saturday, 21 September 2013
Author / Source: Kumkum Chadha

New Delhi, Sept 20: Having virtually nothing to showcase by way of political diplomacy, India is now dangling the "electricity diplomacy" carrot to Bangladesh. It is likely to invite a political leader from Bangladesh to India when the crucial Baharampur Bheramara transmission link between the electricity grids between the two countries will be commissioned.

EVEN THOUGH India's Foreign Secretary Sujatha Singh remained non committal about any Bangladeshi leader's visit, the possibility is not completely ruled out. Of course a lot will depend on Bangladesh given that the incumbent government is under attack for its pro India policy.

With India's non delivery on two crucial issues namely Teesta water sharing and Land Boundary Agreement, the incumbent government in Bangladesh can ill afford to be seen as overtly friendly to India in face of Opposition back home.

On her part, Sujatha Singh said that "while it is true that we have not been able to conclude Teesta and LBA we are committed to take it to its logical conclusion". She said this during an interaction with press persons here today.
The power link between the two countries is seen as one which will in some measure make up for India's failure to deliver on the political front to Bangladesh.

The urgency on the part of the Indian government is to commission the power link before December this year.
Elections in Bangladesh are due by January and the power link will facilitate cross border electricity transmission of up to 500 megawatt from India to Bangladesh. This would be a shot in the arm for Bangladesh which is, in one sense, power starved.

Sources in the government have confirmed that there is an urgency in expediting the power link to ensure that the interconnection is running well ahead of the elections. It is for this reason that it is playing safe by slating the commissioning to happen by the first week of October which will give enough time to Bangladesh, nearly two months, to go to its people and show some positive gesture from India if not politically at least in the sector of power.

It will also use this to flag India’s intention to honour its commitments to Bangladesh including the two controversial treaties. India, it may be recalled, made a foiled attempt to introduce the LBA Bill in Parliament but the Opposition stalled it. It was then deferred for want of political consensus. The fact that the Bill reached the stage of introduction is something Hasina can tag with the power link deliverable on India’s part.

The 400 kv line on both sides of the border has already been energized and the high voltage direct current buffer will also be ready for testing soon. The buffer prevents fluctuations of one grid adversely affecting the other.
The power link will facilitate 500 MW power flow from India to Bangladesh. Of this 250 MW will be from the Centre’s unallocated quota of power. The remaining would be contracted by Bangladesh from the Indian electricity market.

Prime Minister Manmohan Singh would inaugurate the link. Preparations for his visit to Bheramara have already begun.

The 71 km transmission link between the eastern region of India and western grid of Bangladesh is being hailed as a major milestone in strengthening the bi-lateral relations between India and Bangladesh. It would also be a step in the direction of helping Sheikh Hasina to showcase to its people that while political compulsions have stalled Teesta and the LBA, India’s intentions should not be suspect. To give credence to this, the power link would come handy.

Hasina, it is well known, is under flak for putting too much faith in India while getting empty promises in return.
On his part, Prime Minister of India Dr Manmohan Singh is likely to meet his counterpart Bangladesh’s Sheikh Hasina on the sidelines of the UN Conference in New York.

Confirming this Sujatha Singh told press persons that the Prime Minister would reiterate India’s commitment to honouring bi lateral commitments while explaining the difficulties of its inability to honour the long pending Teesta water sharing treaty and the Land Boundary Agreement which has been stuck due to opposition by some political parties in India including the BJP and Mamata Bannerjee led Trinamool Congress.
That apart there will be discussion on economic, trade and power sector issues.







Delhi dangles

 

[Skies]

Power deal likely with Indian company

Saturday, 21 September 2013
Author / Source: UNB

Dhaka, Sept 20: The government is likely to sign a power purchase agreement (PPA) with Indian private power trader PTC India Ltd within a few days to import 250 MW from October. This will be an addition to the 250 MW of power to be imported Indian under a government-to-government agreement signed between Bangladesh Power Development Board (PDB) and Vidyut Vyapar Nigam Ltd, a subsidiary of Indian state-owned NTPC (National Thermal Power Corporation). This means Bangladesh will import a total of 500 MW of electricity from India. Of this, 250 MW will come from the NTPC and the remaining 250 MW from private company PTC India. Official sources said the deal between PDB and VVN of NTPC was signed in February last year to get 250 MW power.

The tariff of the power was initially determined at Rs 2.80 (approximately Tk 4.66) per kilowatt hour (each unit). But this tariff will finally be determined by the Indian Central Electricity Regulatory Commission (CERC) considering the price of import-start time. Indian power tariff is set from time to time by the CERC.

Bangladesh’s Cabinet Purchase Committee in July approved this tariff of the PTC. Following the Cabinet body’s approval, both the PDB and the PTC initialed a power purchase deal.

The Power Division then sent the deal to the Law Ministry for legal vetting.

Meanwhile, the construction of a 117-km long high voltage transmission line from Bahrampur substation in Murshidabad of India to Bheramara grid substation of Kushtia in Bangladesh has been completed recently. Two high capacity grid substations in the two countries are also ready for power transmission.

Electricity will be transmitted at 400KV level under a deal between the Power Grid Company of India (PGCI) and the Power Grid Company of Bangladesh (PGCB).


Power deal likely with Indian company

 

[Skies]

IMF mission to review non-concessional loan

Saturday, 21 September 2013
Author / Source: JAGARAN CHAKMA

DHAKA, SEPT 20: A delegation from the International Monetary Fund (IMF) is arriving here on Saturday to review the non-concessional loan borrowed by Bangladesh, sources in the Economic Relations Division (ERD) said. The mission will focus on the Padma Multipurpose Bridge (PMB) fund management and the government’s management of external financing for the PMB project. The team, led by IMF’s deputy chief for the Asia-Pacific region, will visit the country from September 24 till the beginning of the next month. The delegates will sit with the ERD, Bangladesh Bank and the finance minister to discuss the PMB funding issue and sovereign bond for the PMB project.

According to sources, although the mission did not specify the issues with regard to hard-term loans, it is likely to raise the issue of $1-billion arms deal between the Russian Federation and Bangladesh.

Russia has extended Bangladesh a credit of $1 billion for the purchase of Russian weapons and military technology.
Meanwhile, the IMF has sent a letter to prepare a detailed report on non-concessional loan. The mission will discuss with the Bangladesh Bank the concessional loans borrowed from different development partners.

In its letter, the IMF enquired about the outturn of foreign assistance in Bangladesh, long-term loan for development projects, as well as expected foreign assistance in FY 2014. The team will also sit with the committee on non-concessional loan to discuss the issue of sovereign bond for the PMB project.

ERD secretary Abul Kalam Azad, additional secretary Arosto Khan and additional secretary of the finance division Nazmus Sakib will lead the Bangladesh side.

The government is unable to take non-concessional loans from China, the Islamic Development Bank (IDB), the Asian Development Bank (ADB) and many other donors due to the IMF's tough conditions, attached to the latter's ECF worth $1 billion.
As per the IMF conditions, the government cannot borrow non-concessional loans beyond certain amount in a given period of time. The IMF considers a loan carrying less than 35 per cent grant element as non-concessional or hard-term loan.
The $1 billion worth ECF is now a big hurdle to the government's borrowing of further loans from other donors.

Under a three-year arrangement, the IMF in April 2012 made a commitment to provide $1-billion ECF for reducing pressure on the balance of payments (BoP). So far, it has disbursed only $409.7 million from the ECF facility.
The Bangladesh government was to be allowed to borrow a maximum of $3-billion non-concessional or hard-term loan from any lender until last the fiscal year.

Since the government has already borrowed $2.86 billion of such loans from different donors till the last financial year, it will now be able to borrow the remaining $140-million non-concessional loan.



http://www.theindependentbd.com/ind...ncessional-loan&catid=132:backpage&Itemid=122

 

[Skies]

RMG workers grand rally in city today

Saturday, 21 September 2013
Author / Source: UNB

DHAKA, SEPT 20: Shipping Minister Shahjahan Khan on Friday called for making Saturday’s grand rally of readymade garments workers a success. Garments Sramik Samannoy Parishad, an association of RMG workers, will organise the rally in the capital’s Suhrawardy Udyan to demand rational minimum wages for the garment workers for their survival. Briefing journalists at the temporary office of the association, Shahjahan Khan, also the convenor of Garments Sramik Samannoy Parishad, said the logical minimum wages for the RMG workers should be ensured for the sake of protecting the country’s garment industry. He said the grand workers rally will not be held for gaining any political benefit. The reactionary clique has become frightened seeing the enthusiasm among the readymade garment workers centering the rally.

“It is now the demand of time to forge a strong unity against the ‘conspiracy’ to confine women workers in the houses. The rally will be held protesting the retrenchment of RMG workers,” Shahjahan Khan added.
In the rally, the garments workers will place their demands for ensuring rational minimum wages, reinstatement of GSP facilities, and providing adequate compensation to the victims of Rana Plaza collapse and devastating fire incident of Tajreen Garments factory. Shajahan Khan will preside over the rally scheduled to begin at 2 pm.

Women leader Shirin Akter, labour leaders ZM Kamrul Anam, Abul Hossain, Bodruddoza Nizam, Jahanara Begum, Sirajul Islam Rony, Nazma Akter, Joynal Abedin, Nurul Islam, Shamima Nasrin, Alamgir Rony, Naimul Ahsan and Lovely Yasmin were, among others, present in the press briefing.



RMG workers grand rally in city today

 

[Skies]

Nissan to produce cars in Myanmar

Saturday, 21 September 2013
Author / Source: AFP

YANGON, Sept 20: Japan’s Nissan Motor unveiled plans Friday to launch production in Myanmar, as international automakers compete for a share of the former junta-ruled country’s fast-growing car market. Japanese auto producers are ramping up production in Southeast Asia to offset sluggish sales in their domestic market and in recovering Western economies. Nissan said that its Malaysian partner Tan Chong Motors would build the largest automobile manufacturing site in Myanmar, which is emerging from decades of harsh military rule.


The new plant will open in the Bago region in 2015 producing Nissan Sunny cars. With 300 workers, it will have a capacity to assemble more than 10,000 vehicles a year.

Financial terms of the partnership and the size of the planned investment were not disclosed.
Nissan CEO Carlos Ghosn said the move was “a key milestone in our global growth plan”.
“We are confident that Myanmar will be an important economic engine for the region and are committed to help develop its automotive industry,” he added.

Myanmar is one of the poorest countries in Asia after decades of economic mismanagement and isolation under army rule.
Foreign investors are eagerly eyeing the resource-rich country following a series of dramatic political and economic reforms since military rule ended in 2011.

Huge import taxes and a US investment ban aimed at the previous regime had meant vehicles were too expensive for most people, but recent changes have seen a sharp increase in demand for cars. Japan’s Suzuki announced in February that it would resume production in Myanmar while US giant Ford Motor plans to open a showroom in Yangon by the end of the year.


Nissan to produce cars in Myanmar

So Burma has got auto plant before BD?!!!!

 

[eastwatch]

A resource poor Bangladesh with a huge population will have to depend upon its own initiative. Outsiders will keep on shunning our country because our people's ethics, transport bottlenecks, excessive religious practicing, bureaucratic red tapes, a culture of bribery, indecent political style - all go against foreign capitalists coming to our shore and invest.

So, BD may have to keep on investing a part of its own wealth which is created by our hard working countrymen.

 

[eastwatch]

Nissan CEO Carlos Ghosn said the move was “a key milestone in our global growth plan. We are confident that Myanmar will be an important economic engine for the region and are committed to help develop its automotive industry,” he added.

Source: http://www.defence.pk/forums/bangla...h-economy-news-updates-100.html#ixzz2fWKndzaL

Nissan is a Japanese company now controlled by Renault. Mr. Ghosn is one of the most successful CEO in the world. After his appointment to Nissan, Ghosn has single handedly renovated that company and has made it profitable. This high caliber foreign born executive sent on deputation by Renault is highly respected by the Japanese, even some Japanese wanted to see a person like him to become the PM of the country.

If he trusts Myanmar to become an engine of growth, I think he has all the information regarding that country based on which he has decided on building a plant there.

 

[IamBengali]

Independence Tower , Suhrawardy Udayan

 

[Skies]

Islamic banks perform better than conventional ones

Tuesday, 24 September 2013
Author / Source: STAFF REPORTER

DHAKA, SEPT 23: Bangladesh Bank (BB) Governor Dr Atiur Rahman on Monday told a seminar in the city that Islamic banks and financial institutions in Bangladesh are performing better than conventional ones.

“Barring one exception of a small sick Islamic bank in process of restructuring, the Islamic banks in Bangladesh generally have higher capital adequacy ratios and lower non performing loan ratios than their conventional banking counterparts,” the governor said while inaugurating the 4-day seminar and workshop on Islamic financing. Bangladesh Bank (BB) with support from the Financial Services Board (IFSB) of Kuala Lumpur, Malaysia is holding the programme where 40 senior bankers from Bahrain, Japan, Malaysia, Pakistan, Sri Lanka, Turkey and United Kingdom are participating besides the high officials and bankers from Bangladesh.

Giving a brief account on Islamic banking in Bangladesh, the governor said Islamic finance commenced here in early 1980s with just one Islamic commercial bank. By now there are eight Islamic banks running wholly on Shariah principles.
Besides, he said as many as 17 conventional banks, including one globally active foreign bank, are running Islamic banking branches or windows side by side with their conventional banking. Further, approval requests of a number of conventional banks for their conversion into wholly Shariah based Islamic banks indicate robust customer demand in Bangladesh for Islamic financial services.

He noted that aggregate assets and deposits of Islamic banks in Bangladesh have nearly doubled in the last four years and the aggregate assets and deposits both crossed trillion- Taka threshold last year, comprising around a fifth of total banking sector assets and liabilities.

“This share of Islamic banking looks set to grow further with time, given its faster growth than conventional banking,” he observed.
Dr Rahman said the inclusive nature of Islamic banking is also evidenced in their growing and already significant engagement in agricultural, SME and microfinance.

He said, BB has taken a move for structuring some appropriate Shariah compliant SME refinance support line for the Islamic banks. Apart from Islamic banking, Islamic insurance is also now gaining ground in our financial market.
The governor, however, cautioned that challenges are also coming hand in hand with the ongoing growth trends and the emerging new growth prospects.

He said designing and introducing new Shariah compliant versions of conventional deposit and loan products tailored to needs of our financial market require ingenuity as well as thorough understanding of relevant Shariah principles and practices. He said over the years BB and Islamic finance market participants have worked together in developing a fairly comprehensive set of the needed norms, guidelines and regulations.

The core standards developed by IFSB on various aspects of Islamic finance have been crucially helpful in this important work.
IFSB Secretary General Jaseem Ahmed and BB Deputy Governor SK Sur Chowdhury also addressed the inaugural session of the international seminars and workshops.

There are seminars and workshops in 13 sessions during the four days of the programme. The topic for the five seminars on September 24 and 25 will be the prospects and challenges in the development of Islamic finance for Bangladesh.
The last two days will have a workshop in nine sessions on “Facilitating the implementation of the IFSB Standards”.


Islamic banks perform better than conventional ones

 

[Skies]

EU consortium to start inspecting RMG factories from November

Tuesday, 24 September 2013
Author / Source: STAFF REPORTER

DHAKA, SEPT 23: A 87 member EU consortium of retailers and international brands – Accord on Fire and Building Safety in Bangladesh --expected to start inspection of Bangladesh RMG factories that supply them necessary apparels from early November. BGMEA (Bangladesh Garment Manufacturers and Exporters Association) Vice President Md Shahidullah Azim informed the press about the Accord time-bound action after a meeting with members of Accord.

BGMEA delegation, led by its vice president Shahidullah Azim, held a hour long discussion meeting with visiting Accord members led by its interim executive director Sean Ansett. They discussed the nitty-gritty of technicalities of the inspection, the mode of operandi and about the unified code of conduct.

The EU has formed the “Accord on Fire and Building Safety in Bangladesh” and announced its action plan in the Swiss city of Geneva on July 8. Alternatively, the North American retailers’ alliance unveiled its five-year safety plan for Bangladesh garment factories on July 9 which will include inspecting within a year every factory they use for outsourcing clothing.

EU customers who are part of the Accord on Fire and Building Safety in Bangladesh have listed 1800 factories that currently supply them with garments, while the North Americans in the Alliance for Bangladesh Workers Safety identified some 600 factories for inspection.

Azim said, they are preparing a parameter on assessment of risks of RMG factories which will be submitted to the International Labour Organisation (ILO) at the end of the current month to help ILO in forming a common standard on fire and building safety. In addition, an updated list of 1800 factories they use for outsourcing will also be submitted to the ILO, he added.

During the meeting, Sean Ansett told the BGMEA that chief executive director and chief inspector of Accord would be appointed by the first week of November. After their appointment, Azim said, it is expected to start the inspection of supply factories from the first week of November.

He also said it would take about a year to inspect all the 1800 factories which are used by the signatories of the accord. Under the accord, there will be two types of fund, one is common fund for training and inspection and another is collective fund, the BGMEA vice president said.




EU consortium to start inspecting RMG factories from November

 

[Skies]

Country receives $2.25b remittance in two months

Tuesday, 24 September 2013
Author / Source: ABU SAZZAD

DHAKA, SEPt 23: Bangladeshis living and working abroad sent home $2.25 billion in the first two months of the current fiscal, the country's central bank data showed Monday.

According to Bangladesh Bank (BB) data, the flow of inward remittances plunged over 14.46 percent year-on-year to $1,008.20 million in the last month, Xinhua reported. Remittances, one of the key sources of foreign exchange for the impoverished nation, in July were $1,238.96 million, it showed.

The inflow of remittances from nearly nine million Bangladeshis in the 2012-13 fiscal, which concluded in June, reached a record high of nearly $15 billion, about 13 per cent higher than a year ago, the BB data showed.

Most of the remittances came from Saudi Arabia, the United Arab Emirates, the United States, Kuwait,
Britain, Malaysia, Oman, Qatar, Singapore, Bahrain, Italy and Australia, according to the bank.

The country witnessed the record high remittance inflow in the just-ended fiscal year (2012-2013) of $14460.52 million.
“It’s the highest amount of remittance that the country ever received in a year,” Bangladesh Bank official said.
He said Bangladesh had received $ 12,843.43 million remittance in 2011-2012 fiscal year, which was $ 11,650.31 million in 2010-2011 fiscal year.

240.36 million remittance received the country from state-owned commercial bank’s channel, 8.82 million from specialised bank’s, 455.52 million from the private commercial bank’s (PCB) chanel and 9.90 million from the foreign commercial bank’s chanel.
Among the PCB channel, Islami bank received the highest remittance worth of $ 165.75 million.

Bangladesh Bank permits banks in Bangladesh to establish drawing arrangements with Foreign banks and Exchange houses for facilitating remittance by Bangladeshi nationals living abroad. Persons willing to remit their earnings through official channels can buy either Taka draft or US dollar draft from these Foreign banks and Exchange houses having drawing arrangements with different banks in Bangladesh. Bangladeshi nationals living abroad can send Foreign Exchange very easily and directly to their own bank accounts maintained in Bangladesh or to their nominated person's / relative's bank accounts in Bangladesh.

Furthermore, recently banks have taken some major steps towards crediting the proceeds of remittances to the beneficiary's account promptly, maximum by 3(three) days.

Country receives $2.25b remittance in two months

 

[eastwatch]

Dollar buying continues - bdnews24.com

Dollar buying continues
Abdur Rahim Harmachi, Chief Economics Correspondent, bdnews24.com
Published: 22 Sep 2013 11:09 BdST Updated: 24 Sep 2013 09:09 BdST

Bangladesh Bank continues to buy US dollars from the market to stabilize the value of Taka – but some feel that could adversely impact the economy.

The critics say Indian goods, buoyed by a falling rupee, may gain a greater share of the Bangladesh market if the Taka remains stable vis-à-vis the dollar.

In the first two and half months of the current 2013-14 fiscal, the Bangladesh Bank has picked up $ 1 billion from the floating market, said Kazi Saidur Rahman, who heads the central bank’s Forex Division.

“This buying has been possible as more dollars are available in the market” he said.

In the entire 2012-13 fiscal, $ 4.8 billion had been purchased from the market – so clearly the buying has gone up this fiscal.

That has helped the Taka stay stable against the US dollar, at a time when the Indian rupee depreciated sharply against the US currency.

As a result, Bangladesh forex reserves have shot up to $ 16 billion.

Former Bangladesh Bank governor Mohammed Farashuddin is not sure whether buying huge amount of US dollars is the right thing to do under current circumstances.

“The dollar has gained against the Indian rupee but Delhi may be using this to drive up the country’s exports in competitive markets. This may help Indian goods capture the Bangladesh market all the more,” Farasuddin told bdnews24.com.

He said Indian goods have become cheaper in our market after the rupee has fallen against the dollar but with the Taka stable, our goods are more expensive now.

“As it is , we import a lot from India and the trade balance is always adverse. But this is set to increase both in legal and informal trade.”

In India, the rupee has lately improved against the dollar. After falling to below 68 rupees for a dollar a week ago against 51 four months back, the rupee has now clawed back to 61.74 to a dollar on Thursday.

This has happened on the back of some other measures announced by Reserve Bank of India’s (RBI) new governor Raghuram Rajan. But the RBI has refrained from frantic dollar buying.

Bangladesh introduced the floating exchange rate in 2003 , leaving foreign exchange value to be determined by market forces.

But Bangladesh Bank has often intervened to stabilize the national currency and buying off US dollars has been favoured.

“This is not a good thing to do. It serves no purpose holding a huge forex reserve built on dollar buying. These funds should be invested gainfully for growth,” said Farasuddin.

“ It is enough to have a forex reserve that can pay for critical food imports so that none starves in the country.”

Farasuddin said bumper harvests have provided Bangladesh with 1.5 million tonnes of food grains which means no food imports may be necessary for about 18 months.

“So holding on to a huge forex reserves is not a smart option,” Farasuddin said.

After paying off the Asian Clearing Union (ACU) in early September, Bangladesh forex reserves had dropped somewhat to $ 15.5 billion, but it has soared past $ 16 billion in the last few days.