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The latest Forex reserve is enough for meeting import expenditure of more than 10 months well above the international standard of 3 months
The country's foreign exchange reserves continued to make new records crossing $40 billion mark on Thursday keeping the money market afloat.
High remittance inflow despite sluggish manpower export amid pandemic and low import expenditure mainly contributed in building new height of forex reserves strengthening the country's foreign dealing capacity.
Foreign exchange reserve started to make one after another record since June crossing $34 billion dollar and crossed $39 billion on September 20, according to the Bangladesh Bank data.
The latest forex reserve is enough for meeting import expenditure of more than 10 months well above of international standard of 3 months.
The remittance inflow saw 46% growth in September compared to the same period of the last year.
Another foreign currency earning source export rebound in September overcoming pandemic shock when import expenditure still remained negative.
In September, export earning saw 3.53% year-on-year growth when import with latest update till August registered negative growth of 6.68%, according to the central bank data.
The rising forex reserve is a good sign for the country as it will increase government's expenditure capacity, said Fahmida Khatun, executive director of Centre for Policy Dialogue (CPD).
However, sustainability is the question because migrant workers are losing job who mainly contribute in reserve, she said.
Remittance inflow jumped even in pandemic as it is a common trend to send more money home during any crisis for managing distress, she said.
Moreover, fall in good and fuel prices in the global market also saved foreign currency expenditure.
She said fall import is not always good sign because if capital machinery imports decline that indicates investment is not being done. So, it should be looked that which components of imports have been declining, she said.
The strong position of forex reserve prompted the government to think about creating separate fund for using as source of loan for foreign payments.
The new idea that government threw to the Bangladesh Bank for finding a way out on how to implement.
In response to the idea of the government, the board of Bangladesh Bank made the policy decision to finance from forex reserve primarily in two sectors – power and port development projects.
The overflow of foreign earnings also kept Bangladesh Bank in comfort position with country's current account balance even in pandemic situation.
The country's current account balance saw a surplus during the ongoing Covid-19 pandemic, reaching over $3 billion during the July-August period of the current fiscal year.
The amount was only $204 million during the same period of the last fiscal year.
According to the latest data of the central bank, during July and August of fiscal year 2020-21, the country's trade deficit narrowed by 66% to $698 million with a significant decrease in import payments.
Money market has also been enjoying advantage of high inflow of foreign currency as the Bangladesh Bank purchasing foreign currency from banks pushing more money into the market.
Between July 1 and October 4, the Bangladesh Bank bought the dollar worth $2.62 billion, up 200 per cent from the last fiscal year.
The dollar purchasing by the central bank kept dollar price stable at Tk 84. 90 to Tk 84.80 in last several months, according to central bank data.
The central bank intervention in forex market contributed to keep money market well liquid raising excess liquidity above Tk 1.40 lakh crore as of June.
Source
The country's foreign exchange reserves continued to make new records crossing $40 billion mark on Thursday keeping the money market afloat.
High remittance inflow despite sluggish manpower export amid pandemic and low import expenditure mainly contributed in building new height of forex reserves strengthening the country's foreign dealing capacity.
Foreign exchange reserve started to make one after another record since June crossing $34 billion dollar and crossed $39 billion on September 20, according to the Bangladesh Bank data.
The latest forex reserve is enough for meeting import expenditure of more than 10 months well above of international standard of 3 months.
The remittance inflow saw 46% growth in September compared to the same period of the last year.
Another foreign currency earning source export rebound in September overcoming pandemic shock when import expenditure still remained negative.
In September, export earning saw 3.53% year-on-year growth when import with latest update till August registered negative growth of 6.68%, according to the central bank data.
The rising forex reserve is a good sign for the country as it will increase government's expenditure capacity, said Fahmida Khatun, executive director of Centre for Policy Dialogue (CPD).
However, sustainability is the question because migrant workers are losing job who mainly contribute in reserve, she said.
Remittance inflow jumped even in pandemic as it is a common trend to send more money home during any crisis for managing distress, she said.
Moreover, fall in good and fuel prices in the global market also saved foreign currency expenditure.
She said fall import is not always good sign because if capital machinery imports decline that indicates investment is not being done. So, it should be looked that which components of imports have been declining, she said.
The strong position of forex reserve prompted the government to think about creating separate fund for using as source of loan for foreign payments.
The new idea that government threw to the Bangladesh Bank for finding a way out on how to implement.
In response to the idea of the government, the board of Bangladesh Bank made the policy decision to finance from forex reserve primarily in two sectors – power and port development projects.
The overflow of foreign earnings also kept Bangladesh Bank in comfort position with country's current account balance even in pandemic situation.
The country's current account balance saw a surplus during the ongoing Covid-19 pandemic, reaching over $3 billion during the July-August period of the current fiscal year.
The amount was only $204 million during the same period of the last fiscal year.
According to the latest data of the central bank, during July and August of fiscal year 2020-21, the country's trade deficit narrowed by 66% to $698 million with a significant decrease in import payments.
Money market has also been enjoying advantage of high inflow of foreign currency as the Bangladesh Bank purchasing foreign currency from banks pushing more money into the market.
Between July 1 and October 4, the Bangladesh Bank bought the dollar worth $2.62 billion, up 200 per cent from the last fiscal year.
The dollar purchasing by the central bank kept dollar price stable at Tk 84. 90 to Tk 84.80 in last several months, according to central bank data.
The central bank intervention in forex market contributed to keep money market well liquid raising excess liquidity above Tk 1.40 lakh crore as of June.
Source
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