A slight dip under the $42 billion mark lately was sufficient to make analysts nervous because the financial system has already been affected by sluggish inward remittances and skyrocketing inflation within the final quarter of the continuing fiscal.
The central financial institution and the economists are saying that the decline of COVID-19 instances was met with a world hike within the costs of commodities because the Russia-Ukraine battle triggered the availability and supply prices to go up. In consequence, the demand for the US {dollars} rose and the Bangladeshi taka, like many different currencies on the earth, started shedding worth.
In the meantime, the upper greenback expenditure for imports and different requirements is placing strain on the international alternate reserves. Bangladesh had a document $48.02 billion in August final yr, enough to pay import payments for as much as one yr, however a gradual decline has introduced it right down to the present stage.
To stabilise an already dwindling financial system and a foreign money market, a phenomenon some economists are calling “disaster at each ends”, the central financial institution has devalued the taka towards the US greenback final week, for the third time in two months.
The US greenback alternate price for interbank transactions was revised down by Tk 0.80 to Tk 87.5, however a number of banks hiked greenback costs to round Tk 92-94 amid heightened demand.
The central financial institution has additionally toughened its coverage for importing luxurious and non-essential gadgets like sports-utility autos, washing machines, air conditioners and fridges.
It had ordered the banks in April to maintain the money margin at 25 p.c for letters of credit score to import the non-essential merchandise after the nation’s commerce deficit stored widening, posting a 64 p.c rise to round $25 billion yr on yr within the first 9 months of the present fiscal yr.
As import prices continued to rise, the Bangladesh Financial institution final week ordered the banks to lift the money margin for the imports of vehicles and digital residence home equipment. For imports of different non-essential merchandise, the margin was set at 50 p.c.
Concurrently, the federal government has additionally taken a number of measures- like placing a bar on civil servants’ international excursions and pausing the event of initiatives that require numerous imported supplies.
In addition to, the federal government has provided expatriate Bangladeshis to speculate limitless quantities of cash within the greenback bond. However because the authorities must pay the curiosity in {dollars}, it has lowered the rate of interest to scale back the {dollars} going in another country.
All these measures have been evidently not sufficient to calm an edgy foreign money market, as the worth of the US foreign money final week shot up additional previous the Tk 100 mark, the best in Bangladesh’s historical past.
The federal government goals to maintain inflation inside 5.3 p.c this fiscal, however it rose to six.22 p.c on the finish of March, in line with official information. Some economists posited the speed has been a lot larger.
The Worldwide Financial Fund, or IMF, doesn’t agree with Bangladesh Financial institution on the way it experiences its greenback reserve.
In an evaluation final yr, when the reserve was at $44 billion by finish of final fiscal, the IMF mentioned the central financial institution overstated its international alternate reserves by $7.2 billion via the inclusion of non-reserve belongings underestimating associated dangers, resulting in an inflated international reserve.
