Foreign currency reserve bears the brunt of big projects, import costs

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Golam Mowla
Published : 11:14, Nov 19, 2018 | Updated : 11:27, Nov 19, 2018

Bangladesh BankFor more than one and a half years, there’s a state of stagnation affecting the foreign currency reserve of Bangladesh Bank. This happened in trying to meet import costs. In the last one and a half years, foreign currency reserve has fallen by 2 billion dollars, informs a Bangladesh Bank report.
As per the report, the reserve on Jun 21, 2017, was 33.01 billion dollars which on  Nov15, 2018, stood at 31.01 billion dollars.
Bangladesh Bank executive director, Kazi Saidur Rahman, said, “Despite a pressure to meet import expenditure, remittance flow has also started to rise and export growth is encouraging.”
So, the reserve may rise again, he added.
However, for some time, money has been transferred overseas through over invoicing, feared economists.
Recently, one dozen banks were show caused for making the currency market unstable. For the same reason, 26 banks were show caused last year. Due to rise in import, the demand of Dollar has risen and the rate of the Dollar has fallen by Tk. 4.
According to Bangladesh Bank, the rate of opening LC’s has risen in the last few months and, in the last fiscal year (2017-18), goods worth 54.46 dollars were imported. In July and August, import expenditures were 4.7 billion dollars and 4.12 billion dollars respectively.
Researcher of the Bangladesh Institute for Development Studies, BIDS, Dr. Zaed Bakht, says, “While there’s some pressure on reserve due to import cost, there’s nothing to worry about because work of several big projects like Padma Bridge, Metro Rail are currently underway.”
In 2001, Bangladesh was forced to keep the import cost in arrear; in the next sixteen years, the reserve reached 33 billion.

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