Forex reserves maintain strong growth

Bangladesh’s forex reserves have been maintaining a steady growth over the last six months to reach $39.32 billion at the end of September this year.

The country’s forex reserves stood at $38.85 billion at the end of August.

Despite the Covid-19 pandemic, the country’s forex reserves have been growing since March this year thanks to a rising trend in remittance and foreign aids, experts said.

The fall in import bills has also contributed to taking the country’s forex reserves to a new height.

Economist Dr. AMB Mirza Azizul Islam said Bangladesh’s overall economic strength is increasing gradually; the forex reserve is also an indicator of the strong position.

“The utilisation of forex reserves in appropriate purpose will support the economy, Bangladesh Bank should focus on the matter,” he added.

Nazneen Ahmed, a senior research fellow at Bangladesh Institute of Development Studies, said having enough forex reserve means greater economic power.

“In the age of globalisation, we have to deal with other countries, having a healthy forex reserves means we have the ability for meeting import expenses, paying interest on foreign loans, etc,” she said.

“The theory of economics states that a country must have foreign exchange reserves equal to the cost of three months of imports,” Nazneen Ahmed said.

Bangladesh Bank data shows the country’s forex reserve was $32.39 billion at the end of March, which increased to $39.32 billion on September 30. Bangladesh can meet 10 months of import demand with the existing reserve volume.

However, some $6.93 billion added to the forex reserves amid a drastic fall in import bills.

Though the country’s manufacturing sectors are struggling with the adverse impact of ongoing coronavirus pandemic across the globe, the country’s financial strength has become stronger than before, experts have said.

According to Bangladesh Bank data, the forex reserves was $38.85 billion in August, $37 billion in July, $35.85 billion in June, $33.22 billion in May, $32.92 billion in April, and $32.39 billion this year.

Bangladesh’s forex reserves stood at $32.92 billion in August 2019. In the last 13 months, the country’s reserve volume has never gone below $31 billion.

Experts said apart from remittance and exports, loan assistance from the World Bank, IMF, ADB, JICA and AIIB have also contributed to the rise in forex reserves.

In the last five months (April-August), around $4.5 billion of loan assistance from these donor agencies has been added to the reserve.

BB sources said the expatriates have sent $1.72 billion remittances to the country till August 27. In August 2019, the expatriates sent home $ 1.44 billion.

Remittance hit an all-time high of $2.6 billion in the first month of the current fiscal year.

According to the Export Promotion Bureau (EPB), Bangladesh earned $3.91 billion from exports in July, the first month of the fiscal year 2020-21. The figure is 59 percent higher than that of July last year and 13.4 percent higher than the monthly export target.

Bangladesh’s export income has returned to growth in July after seven months. In December 2019, export income had increased by 2.89 percent. Since then, growth has been declining.

The country’s export income dropped to 0.52 billion in April at the beginning of the corona crisis.

Exports rebounded to $1.46 billion in May, but the growth slowed to 61.57 per cent.

Exports stood at $2.71 billion in June this year but the growth slowed to 2.5 per cent.