The country’s foreign exchange reserves crossed $21-billion mark for the first time on Monday as Bangladesh Bank purchased US dollars worth around $5 billion this fiscal year to keep taka stable against greenback. A BB official told New Age that foreign exchange reserves stood at $21.03 billion on Monday as the central bank purchased $87 million from the local banks on the day.
He said that the central bank purchased greenbacks worth around $5 billion this fiscal year from the scheduled banks which were grappling with the dollars because of lack of demand.
The central bank had purchased greenbacks worth $4.53 billion in FY13.
The central bank started to purchase greenbacks after the Bangladeshi currency had fallen to around Tk 84 a dollar in the first half of 2012 from around Tk 71 in the previous year, he said.
After the BB bought huge amount of foreign exchange in the last few financial years, the taka became stable at around Tk 77.75 a dollar between May 2013 and February 2014.
Despite the central bank dollar buying spree, the greenback started to depreciate in May and it was quoted (buy-sales) at Tk 77.63-Tk 77.63 on May 22.
Against the backdrop, the central bank pushed up its greenback purchasing, resulting that the taka became stable at Tk 77.63-Tk 77.63 a dollar this month that also boosted the foreign exchange reserves, the BB official said.
The reserves crossed $15-billion mark on May 7, 2013, $16-billion mark on August 13, $17-billion mark on October 22, $18-billion mark on December 19, $19-billion mark on February 19, 2014 and $20-billion mark on April 10, 2014.
After paying a $1.17 billion import bill to Asian Clearing Union on May 8, the reserves were down to $19.4 billion but have steadily risen since, the BB official said.
Former interim government finance adviser Mirza Azizul Islam said that ‘big-but-idle’ reserve was not good for the economy.
‘There is no transparency in the method how Bangladesh Bank is increasing the foreign currency reserves. BB should clearly say how it is hiking its reserves. There is a negative growth in remittance inflow this year while import payment picked up lately,’ he said.
‘The central bank is increasing the reserves by buying huge volume of dollar from the scheduled banks to keep the exchange rate stable, whereas it is allowing local businesses to borrow foreign currency from overseas with hard-term,’ he said.
Azizul said that BB should be more generous to local businessmen in allowing them to import industrial raw materials and capital machinery with the reserves.
Another BB official said that record in foreign currency reserves indicated the slower economic activities and lower GDP growth in the country.
Entrepreneurs did not go for much import of goods and capital machinery due to slower economic activities and fall in domestic demand due to political uncertainty in the country that resulted in bigger reserve in foreign currency, he said.
The reserves may increase further in coming months, if imports do not rise in accordance with the country’s economic size, he added.
-With New Age input
