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Backed by high remittance inflows in the past few weeks, the country’s foreign currency reserves rose to USD 9.80 billion on February 14, from USD 8.90 billion a month ago.
A Bangladesh Bank (BB) statement claimed that a further rise in foreign currency reserves would strengthen the Taka against the US dollar.
According to BB statistics, foreign exchange (Forex) reserves stood at USD 9,795.67 million as on Tuesday. From February 1 to February 10, the country had received USD 417.21 million as remittance.
In January 2012, remitters sent USD 1,215.80 million into the country, which was the highest remittance inflow ever in a single month.
On January 9, 2012, forex reserves went down to USD 8.90 billion, because of adjustment of payment of the bi-monthly instalment of the Asian Clearing Union (ACU), worth USD 750 million.
Before the payment, forex reserves stood at about USD 9.65 billion, according to BB statistics. BB usually pays the instalment from its reserves, once in two months, for imports from ACU member countries.
As per international standards, a country like Bangladesh should hold a sizeable reserve of foreign currencies to meet the import bills for at least three months. For Bangladesh, USD 9 billion is not a safe reserve for three months’ imports, according to IMF’s outlook disclosed last November.
Commenting on this issue, a BB official said that high import cost, especially with respect to fuel import for rental power plants, had put pressures on forex reserves.
The official, seeking anonymity, said the inconsistency between demand and supply of foreign currencies has created an abnormal pressure weakening the Taka against the US dollar.
He said, “High demand for foreign exchanges, especially US dollars, for opening L/Cs (Letters of Credit) for import had triggered a scarcity of US dollars. It cerated pressures on the Taka.”
“However, this situation would improve soon, as the Taka has already started to gain further against the US dollar, as a result of high inflow of remittances,” he added. The official said that remittance inflow would increase in the coming days, as about three lakh Bangladeshis had been sent abroad as migrant labour last year. Meanwhile, the foreign exchange reserves stood at USD 10.29 billion before Eid-ul-Azha in October 2011, but started to decline after the Eid vacation, and came down to USD 9.6 billion after the government paid the ACU bills, worth USD 880 million.
The reserves stayed above the mark due to increased income in exports and higher remittance inflow for several consecutive months.
Forex reserves stood at USD 11.17 billion mark in October 2010, and it was USD 11.32 billion at the end March 2011.
Source: The Independent