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

[Mage]

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

• Shoaib Ur Rehman
• May 6th, 2018

DHAKA: Bangladesh’s foreign exchange reserves rose to $33.11 billion at the end of April, $709 million more than one month earlier, the central bank said on Sunday.

The reserves were nearly 2 percent higher than one year earlier. They are sufficient to cover about 10 months’ of imports for the country of 160 million people, according to the central bank.

In March, the reserves declined about $970 million from the previous month.

Steady garment exports and remittances from Bangladeshis working overseas – the key drivers of the economy – have helped foreign exchange reserves grow steadily in recent years.

Last month, the central bank cut the repo interest rate by 75 basis points to 6 percent, the first such move since January 2016, in a bid to help achieve the 7.4 percent economic growth target for the financial year that ends in June.

Bangladesh’s economic growth hit a record 7.28 percent in the 2016-17 financial year, up from 7.11 percent one year earlier.

https://www.brecorder.com/2018/05/0...change-reserves-rise-to-33-11bn-at-end-april/

 

[Sulman Badshah]

BD have improved its exports and Foreign exchange reserves a lot

 

[UKBengali]

More evidence of the strength of BD economy.

 

[Neptune_]

Excellent.

40 bn.........here we come

 

[Nilgiri]

More evidence of the strength of BD economy.

Oh really, then why is this happening:

In March, the reserves declined about $970 million from the previous month.

and more broadly:

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

 

[fallstuff]

Excellent.

40 bn.........here we come

Not any time soon with the rising oil prices .

 

[Homo Sapiens]

Excellent.

40 bn.........here we come

Unlikely in the next few years.Import is rising faster than export now and remittance growth in insufficient to cover the gap and push upwards. Forex is stable at 32/33 billion for the last 2 years and likely to remain at this level for few more years.

 

[Safriz]

Pakistanis are always glad to see BD improving in any field. Good luck to BD.
Hasina Wajid's poisonous propaganda against Pakistan should stop.

 

[Skies]

Oh really, then why is this happening:



and more broadly:

View attachment 472685

The graph shows that although FEX increases from 2016 to 2018, the trajectory is a falling trajectory. Also there is signification fall from 2017 to 2018.

 

[Bilal9]

View attachment 472706

The graph shows that although FEX increases from 2016 to 2018, the trajectory is a falling trajectory. Also there is signification fall from 2017 to 2018.

I bet the Forex is going toward LC's being opened for capital goods and infrastructure. Can't build your infra without expensive mechanized items like cranes, earth movers, construction and heavy civil engineering items and being a country of our size, these are all super-large ticket imported items...

 

[RIP Pak LAW]

Actually Bangladesh has been benefited a LOT over the last 2 decades because of concessions provided by EU to import their garments. Bangladesh doesn't grow cotton yet they sell its products most as compared to other South Asian rivals. This is only because Bangladesh was considered as a poor country compared to India,Pakistan hence EU provided them with concessions and larger import share. in their market. This is actual Bangladesh success story - a complete thanks to EU. Pakistani Govt dropped the ball in late 90s and looked where we stand today despite of huge cotton growing country.

 

[Skies]

I bet the Forex is going toward LC's being opened for capital goods and infrastructure. Can't build your infra without expensive mechanized items like cranes, earth movers, construction and heavy civil engineering items and being a country of our size, these are all super-large ticket imported items...

You mean the Forex belongs to remittance account and export income account are directly going to import bill account without not getting recorded in total Forex account in the ledger of Bangladesh bank and not showing in the graph?

 

[Śakra]

Great job! Here’s to the next 30 billion

 

[Black_cats]

You mean the Forex belongs to remittance account and export income account are directly going to import bill account without not getting recorded in total Forex account in the ledger of Bangladesh bank and not showing in the graph?

At first get proper knowledge why it is declining!!!

Bangladesh’s forex reserves declining

• Golam Mowla
• Published at 11:07 AM March 13, 2018

https://www.dhakatribune.com/business/economy/2018/03/13/bangladeshs-forex-reserves-declining/

The import cost has risenReuters
Economists and central bank officials say there is no reason to panic

The foreign currency reserves of the Bangladesh Bank is on the decline. The reserves dropped to $31.93 billion from $33.36 billion between February 28 and March 8, according to the central bank.

Officials of the central bank say import costs have increased, particularly after the rise in onion and rice prices in India. Moreover, the reserves took a hit after clearing payment for imports of Asian Clearing Union (ACU).

A Bangladesh Bank official says there is no reason to panic at the decline of the reserves mainly because of a rise in import cost. “It will be possible to foot import bills for the next six to seven months with the current reserves,” the official added.

According to the central bank, the import cost increased by 25.78% in the first six months of the 2017-18 fiscal compared to the same period the previous year. During July to December, food import (rice and wheat) increased by 212%.

The import of necessary machinery for setting up industries rose by about 35% during this period while the import of fuel oil and raw material for industries increased by 28% and 15% respectively.

In the first six months of this year, Letters of Credit (LC) worth $40 billion were opened. The amount is expected to cross $60 billion at the yearend.

Bangladesh’s foreign currency reserves stood at $33.01 billion on June 21 last year. It came down to $32.31 billion on January 17 this year.

The country was witnessing a rise in forex reserves over the last few years but the import cost jumped in the election year, putting pressure on the reserves. However, remittance inflow and export income are increasing.

Bangladesh Institute of Development Studies researcher Dr Zaid Bakht said there was no reason to panic even though the forex reserves had declined a little due to increased import cost.

“The works of some big projects like Padma Bridge and metro rail are going on in full swing. The cost for importing necessary equipment for these projects is increasing,” he noted.

“On the other hand, the import of foodgrains increased after floods destroyed crops. This is also putting pressure on the reserves,” he added.

International standards require a country to have reserves to meet import costs of at least three months. With Bangladesh’s current reserves, it will be possible to meet foot import bills of more than eight months.

Meanwhile, a big balance of payment deficit has emerged with the increase in import costs. In the first six months of the current fiscal, the amount stood at $4.767 billion.

 

[Bilal9]

Actually Bangladesh has been benefited a LOT over the last 2 decades because of concessions provided by EU to import their garments. Bangladesh doesn't grow cotton yet they sell its products most as compared to other South Asian rivals. This is only because Bangladesh was considered as a poor country compared to India,Pakistan hence EU provided them with concessions and larger import share. in their market. This is actual Bangladesh success story - a complete thanks to EU. Pakistani Govt dropped the ball in late 90s and looked where we stand today despite of huge cotton growing country.

Well - the success of Bangladesh in apparel sector is not 100% due to EU and US (GSP) quotas.

The private sector in Bangladesh started off in the apparel sector in the late 70's, when Korea was still involved in it. That was the inception. Pakistani and Indian entrepreneurs did try their hand at garments but could not succeed against Bangladesh because factories here are *much* larger, where economies of scale gives an advantage.

Average size of Pakistani or Indian factories (usually sweatshops in urban areas) are around 100 workers/sewing machines whereas Bangladeshi have around 400~500 workers/sewing machines. Plus Bangladeshi factories are usually also integrated meaning they have dyeing/washing plants in house, saving more time.

The other significant factors are a) significantly lower labor cost and, b) early involvement and continual ongoing quality control training by Korean and Taiwanese buyers.

See below, (dated stats, but labor is always cheaper in Bangladesh by at least a factor of half from any one country)

The Rana plaza incident in 2013 was a wake-up call that turned out to be a blessing instead of a curse. The outsiders who tried to benefit from the death of our workers were paid back in their own coin, as local apparel exports bounced back quickly with active safety initiatives by local private and public sectors which has been universally lauded by both importers and members of the press in developed countries.

There has been substantive improvements in worker and factory safety. I can confidently say that the 1600 factories involved in the apparel trade in Bangladesh are now safer than a majority of the factories in Asian countries in terms of regular safety audits in the following areas,

1. Fire Protection
2. Electrical Hazard Protection
3. Sound Building practices and codes

These practices will only improve exports as our safety standards are now equal to European ISO standards.

See the following for a sample safety audit report for one of the factories, the standards followed are National Fire Protection code (US).

http://accord.fairfactories.org/accord_bgd_files/1/Audit_Files/70949.pdf