Foreign currency reserves in Bangladesh Bank reached a new milestone on Tuesday, crossing the $17 billion mark.
On Monday, the reserves stood at $16.94 billion.
The reserves crossed $17 billion in the first hours of Tuesday breaking all previous records, said Quazi Saidur Rahman, managing director of the central bank’s Forex Reserve and Treasury Management Division.
Such a deposit will enable Bangladesh to meet import expenditures for six months, he said.
Saidur told bdnews24.com, “The reserve has reached such a height following remittances sent by expatriate Bangladeshis. Increase in the export income also helped in boosting it.”
“A total of $80 crore has been remitted in the first 18 days of OCt (Oct 1-18). The flow increased as expatriate Bangladeshis sent more money back home ahead of Eid-ul-Azha,” he said
The government would have to pay import dues of the Asian Clearing Union (ACU) for Sept-Oct period in the first week on November. The reserve would stay above $17 billion until then, the official said.
A boost in the reserve became possible owing to the inflow of remittance and export income, overriding an increase of import costs, Saidur said.
One analysis of Bangladesh Bank’s reserve position showed that it dropped to $1 billion towards the end of the Awami League government”s previous tenure (Sept 2001).
The ACU bill was paid half at that time, for the first time ever in the history of Bangladesh, triggering concerns that the reserve would come down $1 billion.
Zaid Bakht, research director of Bangladesh Institute of Development Studies (BIDS), told bdnews24.com, “The government is going to step out leaving a huge amount of reserves, which is good news for the country’s economy.”
“It will be a relief for the next government.”
Remittance flow saw a growth of 12.6 percent in the last fiscal, but it declined in the current 2013-14 fiscal.
According to Bangladesh Bank, remittance flow decreased 8.1 percent in the first three months of fiscal 2013-14 compared to the corresponding period of fiscal 2012-13.
The remittance flow should further increase in October than during the last three months, Bangladesh Bank official Saidur said, hoping that the flow would continue in the remaining nine months.
BIDS researcher Zaid Bakht said though a 12 percent growth was unlikely this time, there would be more remittance flow than the last fiscal.
“Remittance was low in September, being the middle month of the two Eids. It happens every year. Remittance flow will hopefully increase in the remaining months,” he said.
A total of $327.3 crore was remitted in July –Sept period of current 2013-14 fiscal, which was $355.86 crore in 2012-13 fiscal.
On the other hand, export earnings increased by 21.24 percent in July-Sept of 2013-14 fiscal.
On Aug 13, forex reserves crossed $16 billion mark for the first time in the history of Bangladesh. It came down below $16 billion after the government paid ACU bills. But on Sept 22, it again crossed $16 billion.
According to international standard, a country should have forex reserve enough to meet import bills for three months.
Source: Bd news24