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http://bdnews24.com/economy/2016/06/26/bangladeshs-foreign-currency-reserves-near-30-billion-mark
Home > Economy
Bangladesh’s foreign currency reserves near $30-billion mark
Abdur Rahim Harmachi, bdnews24.com
Published: 2016-06-26 21:45:07.0 BdST Updated: 2016-06-26 21:52:38.0 BdST
In 2001, Bangladesh had to defer its payments to the Asian Clearing Union (ACU) for imports to avoid compromising the then $1 billion foreign exchange reserve, as that would have undermined the country’s global image.
And now, 16 years later, Bangladesh Bank’s foreign exchange reserves are set to cross the $30-billion landmark for the first time, meaning the reserves have grown by 30 times in all these years.
A central bank spokesperson, FM Mokammel Haque told bdnews24.com that the reserves stood at $29.97 billion on Sunday.
“No money was added into the reserve as today (Sunday) was an international holiday. But I think the reserves will cross the $30-billion mark either on Monday or Tuesday or this week,” he said.
Reaching the $30-billion mark even after losing $81 million in a cyber theft earlier this year will be a ‘milestone in Bangladesh’s history’, says economist Zaid Bakht.
Increasing remittances from expatriates abroad and rising export incomes have boosted Bangladesh’s reserves in the past few years.
Drop in import of fuel oil and food also made a positive impact in the growth.
However, remittance inflow has dropped in recent times, but export earnings continue their trend.
Zaid Bakht, Research Director at the Bangladesh Institute of Development Studies (BIDS), thinks the adequate amount in the reserves was helping to easily take care of the import costs of Padma bridge project.
Currently, neighbouring country India’s foreign currency reserves stand at more than $360 billion, while Pakistan’s is at $21 billion.
Central bank officials said that at the end of the Awami League’s 1996-2001 term the reserves came down to nearly $1 billion and it was slightly higher than that when the Justice Latifur Rahman-led caretaker government took office.
During that time, Bangladesh’s ACU dues of $200 million caused certain problems because it was felt important to maintain the $1 billion forex reserve for the sake of the country's global image.
At the time the country paid half of the total bill to ensure aid from different foreign lending agencies.
It is expected that countries must have enough forex reserves to meet for imports for at least three months. Bangladesh clears ACU bills every two months.
The current forex reserve is good enough to clear import bills for the next eight and a half months, going by an estimated monthly requirement of $3.5 billion.
According to central bank data, expatriates sent $13.45 billion in the 11 months (July-May) of the current 2015-16 financial year, 3 percent less than the amount sent at the same time in last fiscal.
In 2014-15 fiscal, Bangladesh received $15.31 billion, 7.6 percent more than the amount sent at the same time in previous fiscal.
However, in the 11 months (July-May) of the 2015-16 fiscal, export earnings increased 9 percent higher than the amount earned in the same time during last fiscal.
At the same time in the current fiscal, the number of Letters of Credit (LC) opened has dropped by 2 percent.
Home > Economy
Bangladesh’s foreign currency reserves near $30-billion mark
Abdur Rahim Harmachi, bdnews24.com
Published: 2016-06-26 21:45:07.0 BdST Updated: 2016-06-26 21:52:38.0 BdST
In 2001, Bangladesh had to defer its payments to the Asian Clearing Union (ACU) for imports to avoid compromising the then $1 billion foreign exchange reserve, as that would have undermined the country’s global image.
And now, 16 years later, Bangladesh Bank’s foreign exchange reserves are set to cross the $30-billion landmark for the first time, meaning the reserves have grown by 30 times in all these years.
A central bank spokesperson, FM Mokammel Haque told bdnews24.com that the reserves stood at $29.97 billion on Sunday.
“No money was added into the reserve as today (Sunday) was an international holiday. But I think the reserves will cross the $30-billion mark either on Monday or Tuesday or this week,” he said.
Reaching the $30-billion mark even after losing $81 million in a cyber theft earlier this year will be a ‘milestone in Bangladesh’s history’, says economist Zaid Bakht.
Increasing remittances from expatriates abroad and rising export incomes have boosted Bangladesh’s reserves in the past few years.
Drop in import of fuel oil and food also made a positive impact in the growth.
However, remittance inflow has dropped in recent times, but export earnings continue their trend.
Zaid Bakht, Research Director at the Bangladesh Institute of Development Studies (BIDS), thinks the adequate amount in the reserves was helping to easily take care of the import costs of Padma bridge project.
Currently, neighbouring country India’s foreign currency reserves stand at more than $360 billion, while Pakistan’s is at $21 billion.
Central bank officials said that at the end of the Awami League’s 1996-2001 term the reserves came down to nearly $1 billion and it was slightly higher than that when the Justice Latifur Rahman-led caretaker government took office.
During that time, Bangladesh’s ACU dues of $200 million caused certain problems because it was felt important to maintain the $1 billion forex reserve for the sake of the country's global image.
At the time the country paid half of the total bill to ensure aid from different foreign lending agencies.
It is expected that countries must have enough forex reserves to meet for imports for at least three months. Bangladesh clears ACU bills every two months.
The current forex reserve is good enough to clear import bills for the next eight and a half months, going by an estimated monthly requirement of $3.5 billion.
According to central bank data, expatriates sent $13.45 billion in the 11 months (July-May) of the current 2015-16 financial year, 3 percent less than the amount sent at the same time in last fiscal.
In 2014-15 fiscal, Bangladesh received $15.31 billion, 7.6 percent more than the amount sent at the same time in previous fiscal.
However, in the 11 months (July-May) of the 2015-16 fiscal, export earnings increased 9 percent higher than the amount earned in the same time during last fiscal.
At the same time in the current fiscal, the number of Letters of Credit (LC) opened has dropped by 2 percent.
