Bangladesh foreign exchange reserves rise to $33.11bn at end-April

[Centaur]

Oh really, then why is this happening:



and more broadly:

View attachment 472685

@bluesky @Skies @Centaur @Chak Bamu @Major Sam

I think this post is a good explanation.
https://defence.pk/pdf/threads/bang...to-33-11bn-at-end-april.557485/#post-10477130

 

[Neptune_]

You are right!!! For example if anyone like to send 1000 Canadian Dollar by moneygram it will give the receiver around 64,500 taka where as current exchange rate is 65.56 taka. On top of it you need to add 12 dollar as sending fee. But someone who is sending by hundi he gets 66,500 to 67,000 taka plus no sending fee. So which one you will choose? The one which is giving 2000 to 2500 taka more plus saving the sending fee!!!! That is exactly what is happening. At Danforth area of Toronto and Parc Extension area of Montreal is full of such hundi businessman and they even seats opening an office space. Some do business as travel agency,some as money exchanges company, Some are agent of Bangladeshi mobile money sending companies. All people are sending money through them despite knowing everything as they are getting good fees!!! and obviously based on trust!!!

If I am not mistaken these people charge around 10% of the money that people from Bangladesh try to transfer. For example for 5000 dollar transfer from Bangladesh they will keep 4500 dollar in Canada as the entire process is illegal. They are avoiding money sending fees, Government radar by not paying the tax that government deduct when someone send it from Bangladesh and avoiding paying income tax on it as mostly these are Black money!!!

But now biggest money laundering is happening by opening LC. Many inside Bangladeshi Government knows it. People transfer money abroad saying they are importing machinery, or something else but do not bring anything at all. As there is not much coordination between Bangladesh Bank, LC issuing bank and the customs no one is cross checking whether people are really bringing these machinates or not. As election is coming so people are transferring money in big number. Sudden spike in opening LC means that big money laundering is happening in Bangladesh.

Good post!! Well written and based on actual facts. Of course many government officials know it since its almost impossible to do these types of shaddy stuff without bribing them. It's Bangladesh, everything can be made legal here if u know where to spend money.

 

[Nilgiri]

Last year they took 2 billion from Forex reserves to create a sovereign wealth fund. Since money sitting idle in bank isn't that useful.

They developed cold feet on it (not to mention the forex stagnation trend started well before the SWF idea was given initial go ahead by BD cabinet):

https://www.thedailystar.net/business/sovereign-wealth-fund-taka-bond-plans-scrapped-muhith-1396105

Honestly it was a bad idea to begin with if you see where forex accumulation in BD occurs from (certainly not trade surpluses given BD largely runs deficit there for a long time,.... it is largely remittance + diaspora savings based).

As for money sitting "idle" in bank not being "useful"...again that is flawed argument once you look at where the forex accumulation in BD comes from (i.e its not domestic activity/resource based)...thus it is very slippery slope to try harness some perceived portion of it for SWF or other defacto re-investment (given those will be routed through a domestic based Mx velocity first) that too with little financial sector reform (to get an appropriate return from it compared to the security static quality of forex in first place). There is also the issue of reverse (appreciation) pressure created on Taka...this is why China for example (at much larger scale of forex) prefers only marginal use of its forex for such funds and foreign investments...given the employment/socioeconomic sensitivity to an appreciating currency. BD is in even more vulnerable spot on all this, so Muhith made pragmatic call here.

Billu as much as he is illiterate generally on such topics is correct on this one (there are articles in BD media out already quoting ministers and analysts), its capital goods import (and raw construction materials) + higher oil bill + higher prices of certain inelastic commodities....and BD export + remittance flow not expanding fast enough to cover this. BD govt is optimistically saying this trend will last just one year, lets see. I have a feeling it may last quite longer than that as BD is not diversifying enough at all in its export industries (but imports will definitely get more and more diverse overall and also specifically in their effective price elasticities w.r.t RMG)....and I doubt capital good import excess (over export base) is going to last just one year (given BD industry is next to 0 on it, but Chinese loans will fuel it).

My point on it in response to UKbengali is to not quote one month forex increase as some economic strengthening miracle (when the trend is quite stagnant/declining in the more relevant timeframe now...i.e is the larger drop in March a clear sign of failing BD economy by same logic?....i.e we must average out over half - year time frames.)

Would also BTW like to hear what your opinion on BD households according to BBS (HIES 2016 survey) now consuming less calories than they did in 2010 AND when inflation index applied, having less income than they did in 2010 (i.e nearly all growth, inflation laundered or not, just went to the elite in the time period and they seem to be largely sitting pretty on it too....and the poor get stuck with the "bill"...i.e the inflation bill).

@Skies @bluesky @Centaur @Chak Bamu @Major Sam

 

[Mage]

Would also BTW like to hear what your opinion on BD households according to BBS (HIES 2016 survey) now consuming less calories than they did in 2010

I'm not sure what to make out of this calorie intake..........Bangladesh still does better than Pakistan and INdia in hunger index. Not to mention looking at calorie intake by country.....it says Mauritania's per capita calorie intake is higher than that of Japan....Niger scores higher than India. Not to mention based on 2008 data, Pakistan's calorie intake was just higher by 10 calorie despite them having more than twice PPP income than Bangladesh back then.....They say calorie intake decreased because of decrease in rice intake....

having less income than they did in 2010 (i.e nearly all growth, inflation laundered or not, just went to the elite in the time period and they seem to be largely sitting pretty on it too....and the poor get stuck with the "bill"...i.e the inflation bill).

It's hard to believe.....salary of govt employees increased a lot in last 6-7 years...I have said before,based on my observation....things have improved.......i.e. begging, rickshaw fare....Obviously more rickshaw puller now owns a mobile phone compared to 2010. Obviously more people using Internet compared to 2010. More cars running in the streets compared to 2010....these things cost. If income were going down I wouldn't expect it to be that way...It could be 2010 data was a fraud?....I wouldn't know...It's not like they started data fudging just now.

 

[Nilgiri]

I'm not sure what to make out of this calorie intake..........Bangladesh still does better than Pakistan and INdia in hunger index. Not to mention looking at calorie intake by country.....it says Mauritania's per capita calorie intake is higher than that of Japan....Niger scores higher than India. Not to mention based on 2008 data, Pakistan's calorie intake was just higher by 10 calorie despite them having more than twice PPP income than Bangladesh back then.....They say calorie intake decreased because of decrease in rice intake....

It's hard to believe.....salary of govt employees increased a lot in last 6-7 years...I have said before,based on my observation....things have improved.......i.e. begging, rickshaw fare....Obviously more rickshaw puller now owns a mobile phone compared to 2010. Obviously more people using Internet compared to 2010. More cars running in the streets compared to 2010....these things cost. If income were going down I wouldn't expect it to be that way...It could be 2010 data was a fraud?....I wouldn't know...It's not like they started data fudging just now.

Hope you took cognisance of the forex dip trend reasons (no its not SWF stuff).

Continued rest here since its getting off topic:

https://defence.pk/pdf/threads/repo...ality-credibility.525379/page-2#post-10481823

@bluesky @Centaur @Skies @Ashes @Tanveer666

Check the sample size reduction and other issues of note that BD doing (when it comes to certain surveys) that I stumbled across over there.

 

[bluesky]

Forex reserve falls below US$ 32b
Siddique Islam | Published: May 10, 2018 10:15:56

Reuters file photo

Country's foreign exchange reserve (forex) fell below US$ 32 billion again on Wednesday, following a regular bi-monthly payment to Asian Clearing Union (ACU) and the central bank's direct selling of US dollar to the commercial banks.

The forex reserve came down to $31.92 billion on the day from $33.23 billion on the day before, according to the central bank's latest data.

Bangladesh paid $1.39 billion to the ACU against imports during the March-April period of the current calendar year, according to officials.

Earlier the forex reserve dropped below $32 billion around two months ago mainly due to higher import payments.

The reserve was recorded at $31.93 billion on March 08, following the ACU payment for the January-February period of this year, and on the day before it was $33.49 billion.

"Lower rice imports from India have brought down the overall import payments under the ACU arrangement during the period under review," a senior official of Bangladesh Bank (BB) told the FE.

Bangladesh imports different consumer items, cotton, raw materials and capital machinery from the ACU member countries, particularly from India, Pakistan and Bhutan, according to the official.

"We've already remitted the fund to the ACU headquarters in Tehran in line with the existing provisions of the union," the central banker added.

Under the existing provisions, outstanding import bills and interests thereof are to be paid at the end of every two months.

The ACU is an arrangement involving Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan, Sri Lanka and the Maldives, through which intraregional transactions among the participating central banks are settled on a multilateral basis.

The union started its operation in November 1975 to boost trade among the member countries. Bangladesh and Myanmar joined the union as the sixth and seventh members in 1976 and 1977 respectively. Bhutan joined the ACU in December 1999 and the Maldives in January 2010.

Meanwhile, the BB is providing foreign-currency support to the commercial banks continuously for clearing the import bills, particularly for fuel oils, capital machinery and consumer items, including food grains. It sold $21 million to three commercial banks at market rate on Wednesday to meet their increased demand for the greenback.

The US dollar was quoted at Tk 83.10 each in the inter-bank forex market on Wednesday - the rate remained unchanged from the previous working day.

The central bank resumed providing the forex backup in the recent months through selling the US currency to the banks directly to keep the exchange market stable.

Nearly $2.0 billion had been sold to the commercial banks since July 01 of the current fiscal year, the BB officials added.

The central bank might continue with such support to the banks in line with the market demand, they hinted.