Dollar reserve shoots ast 21bn

[eastwatch]

Forex reserve shoots past $21bn -
bdnews24.com

Forex reserve shoots past $21bn
Abdur Rahim Harmachi, bdnews24.com

Published: 2014-06-16 17:19:55.0 BdST Updated: 2014-06-16 21:20:38.0 BdST

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The central bank’s foreign currency reserve has crossed $21 billion, setting a new record.
Bangladesh Bank Forex Reserve and Treasury Management Division’s General Manager Kazi Saidur Rahman told bdnews24.com that the reserve was $21.03 billion at the end of Monday.

He said the reserve was boosted by a spurt in remittance flow and decline in import costs.

The remittance flow has already reached $600 million this month, and expatriates are likely to send more money home ahead of the Eid-ul-Fitr.

On April 10, the reserves first went above the $20 billion mark.

After paying a $1.17 billion import bill to Asian Clearing Union on May 8, the reserves were down to $19.4 billion but has steadily risen since.

 

[Dem!god]

good for Bangladesh....!!!
congratulations....!!!

 

[T90TankGuy]

Congrats to BD.
just a question but isn't this a lot more reserves than the GOP holds at the moment?

 

[janon]

Congrats to BD.
just a question but isn't this a lot more reserves than the GOP holds at the moment?

Pakistan's total forex reserves right now is about $13.5 billion. (Don't know whether all of it is in dollars.)

Forex reserves rise to $13.5bn - thenews.com.pk

 

[damiendehorn]

Congrats to BD.
just a question but isn't this a lot more reserves than the GOP holds at the moment?

It is, but the situation for the GOP is not the same. Pakistan is in the midst of fighting internal terror, the overspill of the fighting in Afghanistan, and protecting its borders with india. They really have very little time and resources to focus on their economy.

Bangladesh also had issues, internal political conflict, ZERO industrial base with the few that existed destroyed before independence and climatic problems. However we are working to build the nation, and to do that we need a strong industrial base and a diversified economy.

The dramatic rise in our FE is not unexpected, we have built a dynamic garments sector and we are now looking at other sectors like leather, ship building, light engineering, pharma, services etc. a export based economy needs a stable currency and we need to keep the price of the taka down.

The current FE reserve is around 13% of our GDP, and cover between 6-8 months worth of imports, the reserve will most prob more then double within the next 5-6 years and account for 15%-20% of the GDP and 12 months of import cover.

 

[eastwatch]

The current FE reserve is around 13% of our GDP, and cover between 6-8 months worth of imports, the reserve will most prob more then double within the next 5-6 years and account for 15%-20% of the GDP and 12 months of import cover.

Too much of FE erases the competitive edge of our industry. Govt and Private businesses should join hand to increase the inventory of diesel, raw materials and other essentials. In that case, the country will require to build warehouses and oil tank yards. Better to put money on items when they are cheap.

Note that oil prices are up now because of Iraq fighting. A country must think ahead of its present time.

 

[damiendehorn]

To see detail of the BD economy, check the following wiki link (not 100% accurate though): Economy of Bangladesh - Wikipedia, the free encyclopedia

GDP (nominal) for BD is now: $173bn
Per capita GDP is now: $1180
Exports are approx: $35bn
Imports are approx: $33bn
Remittance is around: $15bn

The consensus amongst most economists are that, exports are going to expand at a much faster rate then imports, the number of workers going abroad will increase only marginally though the remittance will continue to grow. The foreign exchange reserve more then doubled in the last 5 years, and will more then double in the next 5-6 years as the BB continues to buy dollar to keep the taka "affordable" for exporters.

The government most likely will look to improve the ratting to A from BB-, reducing the cost of borrowing further. My predictions for the next 5-6 years (2020) are as follows:

Average GDP growth: 6.5%-7%
Exports: $55bn plus
Imports: $47bn plus
Remittance: $19bn
Reserves: $43bn

 

[damiendehorn]

Too much of FE erases the competitive edge of our industry. Govt and Private businesses should join hand to increase the inventory of diesel, raw materials and other essentials. In that case, the country will require to build warehouses and oil tank yards. Better to put money on items when they are cheap.

Note that oil prices are up now because of Iraq fighting. A country must think ahead of its present time.

The FE reserve of $21bn plus is just an accounting term. The GoB doesn't actually have that, it is held by the exporters and families, the only thing the GoB can do is encourage capital investment through, policies and incentives, it's up to the business comunity to judge how they use that.

The gov can only, spend what IT EARNS through taxes, so as the industries grow, exports grow, remittances flow in then the tax revenue that GoB gets increases. How that is spent reflects its balance on its current account, if it spends more then it earns, then it will have to borrow and the interest it has to pay reflects its ratings.

Having a huge FE, does not negatively effect your competitive edge per say in fact it's an advantage, other factors are far more important, costs of production (such labor, materials, tech, logistics, borrowing, management efficiency etc), marketing etc.

 

[TopCat]

The FE reserve of $21bn plus is just an accounting term. The GoB doesn't actually have that, it is held by the exporters and families, the only thing the GoB can do is encourage capital investment through, policies and incentives, it's up to the business comunity to judge how they use that.

The gov can only, spend what IT EARNS through taxes, so as the industries grow, exports grow, remittances flow in then the tax revenue that GoB gets increases. How that is spent reflects its balance on its current account, if it spends more then it earns, then it will have to borrow and the interest it has to pay reflects its ratings.

Having a huge FE, does not negatively effect your competitive edge per say in fact it's an advantage, other factors are far more important, costs of production (such labor, materials, tech, logistics, borrowing, management efficiency etc), marketing etc.

21 bln is totally owned by BB. Any money held by Exporters or Family is actually held by commercial banks which are not included this figure unlike Pakistan.

 

[idune]

21 bln is totally owned by BB. Any money held by Exporters or Family is actually held by commercial banks which are not included this figure unlike Pakistan.

This is n th thread opened by eastwatch and bdforever to boast about Awami League regime foreign currency deception.

Real story is

1) More than $8 billion of that $21 billion reserve was bought by Bangladesh bank by issuing "I owe you" type of note to commercial banks. Bangladesh bank or govt has no real asset to back that amount.

2) More than 3 billion were accumulated because of increasing amount of foreign currency loan been allowed to be borrowed from foreign banks by local business. That foreign currency loan channeling through Bangladesh bank book. Bangladesh bank justified foreign currency loan by artificially increase interest rate for borrowing from local banks and through excessive govt borrowing. Awami League regime borrowed excessively mostly to finance to subsidize looting through quick rental plants. All in all, Awami League regime using Bangladesh bank crippled local banking systems and benefited foreign banks.

quick rental subsidy = excessive borrowing by govt = higher interest rate in local banks = halt in industrialization = no job creation

excessive borrowing by govt = higher interest rate in local banks = borrowing from foreign banks= addition to reserve in Bangladesh bank book

excessive borrowing by govt = higher interest rate in local banks = halt in industrialization = fall in capital machinery import

3) Drastic fall in import of capital machinery, caused abnormal fall in demand for foreign currency. As a result current account balance and foreign currency build up been piling up at cost of industrialization and job creation. No wonder Awami League party terrorism and end extortion even by law enforcement increased at utterly failed state level.

4) Not to mention, remittance which had been back bone of currency reserve had been decreasing due to destructive policy and activities by Awami League regime.

In reality, Bangladesh foreign currency reserve could really be at or below $10 billion level. That is not enough for even 3 months import.

 

[TopCat]

Why are you are playing the same broken record again and again. BB's job is not buy and sell dollar from market. You mean BB should had left 8 billion dollar in the hand of commercial bank? Find something new to play my frinend.

 

[Sugarcane]

decline in import costs.

How Import costs are declined? by local manufacturing?

Anyway congrats and credit goes to Awami League.

 

[TopCat]

How Import costs are declined? by local manufacturing?

Anyway congrats and credit goes to Awami League.

Did not decline actually but export expanding in a higher pace than the import. Seems like we are moving towards a trade surplus country from a traditional trade deficit country.

 

[idune]

Why are you are playing the same broken record again and again. BB's job is not buy and sell dollar from market. You mean BB should had left 8 billion dollar in the hand of commercial bank? Find something new to play my frinend.

this is just epic understanding and logic about economy. we just have to wait till infamous "rubbish" FM Muhit get hold of this epic piece.

 

[Sugarcane]

Did not decline actually

But your BB's GM is saying "reserve was boosted by a spurt in remittance flow and decline in import costs"