Forex reserves slip below $40b for first time in two years

[bluesky]

Forex reserves slip below $40b for first time in two years

Bangladesh's foreign exchange reserves on Tuesday declined to US$39.77 billion, according to updated data from the central bank. This is the first time in two years that the reserve dropped below the $40 billion mark. The drop has been attributed to Bangladesh Bank's import payments of $1.9

thefinancialexpress.com.bd

Forex reserves slip below $40b for first time in two years
Published: July 12, 2022 19:41:20

---

Bangladesh's foreign exchange reserves on Tuesday declined to US$39.77 billion, according to updated data from the central bank.

This is the first time in two years that the reserve dropped below the $40 billion mark.

The drop has been attributed to Bangladesh Bank's import payments of $1.99 billion last week to the Asian Clearing Union (ACU).

Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of ACU. The central banks of these countries have to make the payments every two months.

The reserves have been under stress for the past couple of months due to a surge in the import bills and a drop in the inward remittance, reports UNB.

Bangladesh's foreign exchange reserves soared to a record amount of $46.15 billion in December last year.

Bangladesh's forex reserves witnessed a fall as import volume in the fiscal year 2021-22 increased to about $78 billion, while foreign exchange gained from remittance and export stood at $73 billion.

The export earnings in FY22 amounted to 52.08 billion and inward remittances $21.03 billion.

The inward remittance shows a fall in FY22 to $21.03 billion from $24.77 billion in FY21.

Md. Serajul Islam, executive director and spokesperson of BB told UNB that the central bank is selling US dollar to meet huge import payments every day.

He said a fall in inward remittance and rising demand of imports are the reasons for the fall in the foreign exchange reserves.

 

[mb444]

Forex reserves slip below $40b for first time in two years

Bangladesh's foreign exchange reserves on Tuesday declined to US$39.77 billion, according to updated data from the central bank. This is the first time in two years that the reserve dropped below the $40 billion mark. The drop has been attributed to Bangladesh Bank's import payments of $1.9

thefinancialexpress.com.bd

Forex reserves slip below $40b for first time in two years
Published: July 12, 2022 19:41:20

---

Bangladesh's foreign exchange reserves on Tuesday declined to US$39.77 billion, according to updated data from the central bank.

This is the first time in two years that the reserve dropped below the $40 billion mark.

The drop has been attributed to Bangladesh Bank's import payments of $1.99 billion last week to the Asian Clearing Union (ACU).

Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of ACU. The central banks of these countries have to make the payments every two months.

The reserves have been under stress for the past couple of months due to a surge in the import bills and a drop in the inward remittance, reports UNB.

Bangladesh's foreign exchange reserves soared to a record amount of $46.15 billion in December last year.

Bangladesh's forex reserves witnessed a fall as import volume in the fiscal year 2021-22 increased to about $78 billion, while foreign exchange gained from remittance and export stood at $73 billion.

The export earnings in FY22 amounted to 52.08 billion and inward remittances $21.03 billion.

The inward remittance shows a fall in FY22 to $21.03 billion from $24.77 billion in FY21.

Md. Serajul Islam, executive director and spokesperson of BB told UNB that the central bank is selling US dollar to meet huge import payments every day.

He said a fall in inward remittance and rising demand of imports are the reasons for the fall in the foreign exchange reserves.

Lower reserves certainly a point of huge concern and BD is going to face heavy challenges in the upcoming global slowdown. But it needs to be pointed out BD achieved the $40bn reserves only a couple of years ago.

Manpower export is up, next harvest post flooding should be a bumper one so will help the scenario somewhat.

Huge import bill beyond oil and food imports was also caused by capital machinery and raw goods like cotton in anticipation huge orders for RMG we are seeing. These will translate in higher export in due course.

I do not for a second make light of the scenario, it is serious but there are also silver lining and hopefully we will see dampening of the deficit in coming months.

 

[Bengal71]

Lower reserves certainly a point of huge concern and BD is going to face heavy challenges in the upcoming global slowdown. But it needs to be pointed out BD achieved the $40bn reserves only a couple of years ago.

Manpower export is up, next harvest post flooding should be a bumper one so will help the scenario somewhat.

Huge import bill beyond oil and food imports was also caused by capital machinery and raw goods like cotton in anticipation huge orders for RMG we are seeing. These will translate in higher export in due course.

I do not for a second make light of the scenario, it is serious but there are also silver lining and hopefully we will see dampening of the deficit in coming months.

A lot of our people are pinning blames of economic woes exclusively on the government. A lot of these problems are being caused by the Russia-Ukraine war which increased the oil prices, food prices and other necessary mineral prices that are required for industries. Almost all countries of the world are suffering and it is the doing of the US and EU with their senseless sanctions on Russia.

 

[PadmaBridge]

Lower reserves certainly a point of huge concern and BD is going to face heavy challenges in the upcoming global slowdown. But it needs to be pointed out BD achieved the $40bn reserves only a couple of years ago.

Manpower export is up, next harvest post flooding should be a bumper one so will help the scenario somewhat.

Huge import bill beyond oil and food imports was also caused by capital machinery and raw goods like cotton in anticipation huge orders for RMG we are seeing. These will translate in higher export in due course.

I do not for a second make light of the scenario, it is serious but there are also silver lining and hopefully we will see dampening of the deficit in coming months.

You are a glass half full person.

Thus you will live long.

Glass half empty people lead a miserable life.

 

[bluesky]

A lot of our people are pinning blames of economic woes exclusively on the government. A lot of these problems are being caused by the Russia-Ukraine war which increased the oil prices, food prices and other necessary mineral prices that are required for industries. Almost all countries of the world are suffering and it is the doing of the US and EU with their senseless sanctions on Russia.

Not Ukraine war. It is the non-industrialization that will keep on subduing other efforts to turn the country into a developing one.

It means very low output of value-added goods with the result of low value of production in the country.

 

[UKBengali]

Not really anything to worry about as BD has had to spend more billions extra to finance imports over the last 6 months.

As global inflation dampens down and BD industrial production and hence commensurate rise in exports we will eventually see an increase in reserves again - in essence growth of exports should be faster than the growth in imports.

 

[Bengal71]

Not Ukraine war. It is the non-industrialization that will keep on subduing other efforts to turn the country into a developing one.

It means very low output of value-added goods with the result of low value of production in the country.

Please understand the context of what I have written. What non-industrialization will do to the country in the long term is a different matter, we are not discussing that. We are discussing the current situation whereby BD is struggling to generate enough electricity because of oil and gas price increase in the international market and it's the resut of the Ukraine war. The 2 year long COVID pandemic also took it's toll on BD. These two issues are impacting all countries of the world.

Not really anything to worry about as BD has had to spend more billions extra to finance imports over the last 6 months.

As global inflation dampens down and BD industrial production and hence commensurate rise in exports we will eventually see an increase in reserves again - in essence growth of exports should be faster than the growth in imports.

But the current high oil and gas price increase is not going away anytime soon. It's a big worry and it can be fatal for many developing countries if it continues for a long time.

 

[UKBengali]

Please understand the context of what I have written. What non-industrialization will do to the country in the long term is a different matter, we are not discussing that. We are discussing the current situation whereby BD is struggling to generate enough electricity because of oil and gas price increase in the international market and it's the resut of the Ukraine war. The 2 year long COVID pandemic also took it's toll on BD. These two issues are impacting all countries of the world.



But the current high oil and gas price increase is not going away anytime soon. It's a big worry and it can be fatal for many developing countries if it continues for a long time.

Oil price is below 100 US dollars a barrel again.

Gas prices are around 3-4 times higher than a year ago though and that will impact the gas fired power plants as BD is no longer self-sufficient in this resource.


Roopur reactor 1(1.2GW) will come online in 2023 and reactor 2(1.2GW) will come online in 2024. With hydroelectric from Nepal flowing from 2026(0.5GW) things will slowly start to get better even if fuel prices stay relatively high throughout this decade. More hydroelectric power is likely to flow from Nepal and potentially Bhutan later on this decade.

BD should be relatively ok unlike some other developing countries.

PS - These high fuel prices will almost certainly mean that the 2nd nuclear power plant is ready and operational by 2030.

 

[Bengal71]

Oil price is below 100 US dollars a barrel again.

Gas prices are around 3-4 times higher than a year ago though and that will impact the gas fired power plants as BD is no longer self-sufficient in this resource.


Roopur reactor 1(1.2GW) will come online in 2023 and reactor 2(1.2GW) will come online in 2024. With hydroelectric from Nepal flowing from 2026(0.5GW) things will slowly start to get better even if fuel prices stay relatively high throughout this decade. More hydroelectric power is likely to flow from Nepal and potentially Bhutan later on this decade.

BD should be relatively ok unlike some other developing countries.

PS - These high fuel prices will almost certainly mean that the 2nd nuclear power plant is ready and operational by 2030.

Yes but those are still quite a few years away. I am talking about the immediate problems, the government is paying high prices for gas fired power per unit, it's a huge burden on us specially that our electricity is subsidized and the government makes little revenue due to low tax collection.

 

[bluesky]

Please understand the context of what I have written. What non-industrialization will do to the country in the long term is a different matter, we are not discussing that. We are discussing the current situation whereby BD is struggling to generate enough electricity because of oil and gas price increase in the international market and it's the resut of the Ukraine war. The 2 year long COVID pandemic also took it's toll on BD. These two issues are impacting all countries of the world.



But the current high oil and gas price increase is not going away anytime soon. It's a big worry and it can be fatal for many developing countries if it continues for a long time.

I understand you are very correct in saying what you said. But, I will remind you that non-industrialization is causing us to import a bigger volume of industrial goods that depleting the foreign currency reserves.

Even today, I have not seen anyone saying the importance of industrialization. So, what happens after five or ten years? We keep on importing fuels that may increase more pressure on the F. Exchange reserves. With fuels, add other industrial/ consumer goods that will be continuously imported.

BD has to adopt a policy for heavy industrialization. Exporting only low value-added garments is no starter. Even a small Taiwan exports $200 billion worth of industrial goods only to China.

Now, China is willing to take more than 3000 items from BD. But, we are able to export only two items. One is jute and the other is semi-finished jute goods.

 

[Bengal71]

I understand you are very correct in saying what you said. But, I will remind you that non-industrialization is causing us to import a bigger volume of industrial goods that depletes the foreign currency reserves.

Even today, I have not seen anyone saying the importance of industrialization. So, what happens after five or ten years? We keep on importing fuels that may increase more pressure on the F. Exchange reserves. With fuels, add other industrial/ consumers goods that will be continuously imported.

BD has to adopt a policy for heavy industrialization. Exporting only low value-added garments is no starter. Even a small Taiwan exports $200 billions worth of industrial goods only to China. Now, China is willing to take more than 3000 items from BD. But, we are able to export only two items. One is jute and the other is semi-finished goods.

Okay. But I am not discussing heavy industrialization in this thread. That's a different matter that can be discussed in a relevant thread at an appropriate time.

 

[bluesky]

Okay. But I am not discussing heavy industrialization in this thread. That's a different matter that can be discussed in a relevant thread at an appropriate time.

But, you are blaming the Ukraine war. Is it not a lame excuse? Why it is then relevant to only BD? Why the industrialized countries are not suffering? Only Germany will suffer for a short period because it will not receive Russian gas. But, it is an industrialized country. It can surmount this very shortly.

It has heavy exports of industrial goods. Am I wrong if I say B D is unable to produce any mechanical goods and so it imports them. Money flows away that way and it has little money left to buy fuels and other necessities.

This is the reality. The country must build industries to offset any future regional war outside of its orbit.

 

[UKBengali]

Yes but those are still quite a few years away. I am talking about the immediate problems, the government is paying high prices for gas fired power per unit, it's a huge burden on us specially that our electricity is subsidized and the government makes little revenue due to low tax collection.

Nothing can be done now but Roopur first reactor of 1.2GW is just 12 months away.

BD is in a good position from 2023 compared to lots of other countries.

 

[Bengal71]

Nothing can be done now but Roopur first reactor of 1.2GW is just 12 months away.

BD is in a good position from 2023 compared to lots of other countries.

I am just worried if the oil and gas crisis because of the Ukraine war lingers whether we will go down the path of Sri Lanka, Allah forbid.

 

[MH.Yang]

In fact, the time left by modern civilization to agricultural countries is running out.

If the controllable nuclear fusion technology is successful, the food grown through nuclear fusion and soilless cultivation technology will quickly occupy the market like industrial products.

At that time, countries that rely on agriculture will usher in devastating disasters.

Seizing every minute and rapidly realizing national industrialization is the responsibility of the country for the future.