The foreign direct investment and private borrowing from external sources were also among the major factors.
The country’s foreign exchange reserve has crossed $21bn yesterday thanks to increased inflow of foreign funds mainly due to the local currency’s becoming stronger against dollar.
It would be enough to meet as many as seven months of import payments as it reached the new high in only two months from $20bn-mark as of April 10. The reserve was $18bn in December last year.
Despite slow growth in foreign remittance and imports accelerating lately ahead of Ramadan, the forex reserve reached the new high due to allowing short-term foreign financing in the private sector, said a senior executive of Bangladesh Bank.
Private sector loans in foreign exchange from Bangladesh Bank fund also contributed to build the reserve, he said.
The central bank measures to maintain a stable exchange rate of taka against US dollars and stimulus to exporters, including expansion of the export development fund, helped the reserve rise to this level, said Bangladesh Bank Executive Director Mahfuzur Rahman.
“The foreign direct investment and private borrowing from external sources were also among the major factors,” he said.
Remittance inflow continued to decline in May, following the previous month due to fall in manpower export in Middle East from where country receives highest remittance.
The country received $1.20bn remittance in May, marking a decline from the previous month’s $1.23bn, according to the Bangladesh Bank data released recently.
The remittance inflow had dropped by 4.3% in April from $1.27bn in the previous month.
The total remittance inflow in 10 months (July to April) of current fiscal year decreased by around 5% to $11.72bn compared to $12.31bn in the same period of the previous fiscal year.
The country’s import expenditure rose by 10.6% to $3bn in April compared to the same month last year.
It, however, registered slow growth as compared to a rise of 30.6% to $3.4bn in March (year-on-year).
Import increased by 23.33% to $3.13bn in February of current fiscal year just after January 5 polls, compared to growth of 15.52% in the same month of the previous year.
The imports took an upturn in the recent months due to the increase in food and capital machinery imports.
Published: DhakaTribune, 17.06.2014