Country’s foreign exchange reserve increased to $32.70 billion on February 19 this year, $739.22 million higher than that in the same period of the previous year. This figure was $31.96 billion in same period of 2019, according to Bangladesh Bank data. Market analysts have attributed the rise to the country’s steady remittance growth. Besides, moderate export earnings and lower import payments have also contributed to rise in forex reserve, they added. They said the country’s remittance inflow witnessed a remarkable growth to stand a new record at $18.32 billion at the end of 2019 for the government’s several stepsincluding cash incentive for remitters.
This inflow increased by 17.88 percent or 2.78 billion during the time comparing the same period of time last year, which was $15.54 billion, according to Bangladesh bank. Besides, the import payment has decreased by 2.73 percent to $27 billion during July-December of the current fiscal year from $27.82 billion in the same period of previous year. The country’s exports earning during July-December of the current fiscal year have registered a 5.84 percent negative growth to $19.30 billion, which was $20.50 billion in the same period of the previous fiscal year.
World Bank lead economist Dr Zahid Hussain told Bangladesh Post that if the country has strong foreign exchange reserves, it will be more capable of paying import bills, which will ultimately help raise its rating. The country has comfortable position to reserve foreign currency, he said adding, the government should run the foreign exchange market as per market demand.
The central bank has controlled the market by selling dollar directly to commercial bank which may create liquidity crisis, he mentioned. He said that, “The country’s forex reserve has witnessed fluctuation between $31 billion and $33 billion for several years.” This is mainly for higher import payments against moderate remittance inflow and export earnings, he added. Zahid said, “Stopping unnecessary imports, giving necessary incentives to exporters, and encouraging expatriates to send more remittance will help boost the foreign exchange reserves further.”
Initiatives of the government and Bangladesh Bank to encourage expatriate Bangladeshis to send money through formal channels have played a crucial role in pushing the remittance, thereby, the foreign currency reserves up, bankers said.
Moreover, higher remittance growth coupled with the government’s time-befitting initiatives have helped stabilise the market by reducing pressure on foreign exchange reserve, they added. Bangladesh Bank (BB) has provided directly dollar support to the commercial banks in an effort to stabilise the foreign exchange market, otherwise reserve will increase further, BB sources said. In light of huge crisis of greenbacks to meet higher import payments, the central bank has been providing very good support to commercial banks, and it will continue in the upcoming days, officials said. On Thursday, the exchange rate of US dollar was quoted at Tk 84.95.
In span of one year, the local currency depreciated by almost Tk 1 to Tk 84.95 against US dollar. However, the forex reserve was $32.27 in January, $33.23 in February, $31.78 in March, $32.12 in April, $31.34 in May, $32.71 in June, $32.09 in July, $32.77 billion in August, $31.83 billion in September, $32.43 billion in October, $31.72 in November and $32.68 in December in 2019 and $32.38 in January 2020 respectively. Earlier, the foreign exchange market faced huge pressure to meet higher import payment for buying capital machinery to be used in government development schemes, a BB source said. According to BB, the central bank has sold US dollar directly to the commercial banks to meet higher import payments on a regular basis.
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