$43b reserve again after a month
Bangladesh has the capacity to meet the import cost of eight and a half months
The country's Foreign exchange reserves have again exceeded $43 billion – for the second time.
On 29 December, the reserves touched the $43 billion milestone for the first time. On that day, the reserves stood at $43.17 billion.
The reserves reached $43.02 billion on 4 February.
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The reserves fell to $42 billion on January 7. At that time, $1.27 billion from the reserves was spent on imports.
The amount of reserves is increasing due to the flow of high remittances sent by expatriates and lower import costs as compared to last year.
In the first seven months of the current financial year (July-January), remittance inflows have increased by more than 35% compared to the same period of the previous financial year.
On the other hand, in the six months of July-December, the import expenditure has decreased by about 6% as compared to the same period of the previous year.
Despite the rise in foreign exchange reserves, the exchange rate has remained stable as the central bank continued to buy dollars from the market.
Although there is a risk of inflation due to the increased supply of extra money in the market, the central bank said that there was little risk of inflation due to the increase in flow of money as people's income has declined due to the ongoing corona pandemic.
Commenting on the issue, economist Ahsan H Mansur told The Business Standard that there was little risk of non-food inflation, because reduced income will decrease consumer spending outside of food.
However, he feared that the current turmoil in the rice market will lead to higher food inflation.
He said rice is a big part of the food list of the people of Bangladesh. As a result, rice prices have a large share in the inflation measurement basket.
Due to the strong position of the reserves, Bangladesh has the capacity to meet the import cost of eight and a half months.
Economists say the impact of Covid-19 has led to lower private investment and lower consumer spending, which has led to lower import costs.
Finance Minister AHM Mustafa Kamal has expressed hope that the reserves will exceed $50 billion by this year. He recently said that a decision on whether the reserve money would be used for government projects will be taken before the coming budget.
