Reserve crosses $25b as BB buys $3.7b more from banks

The country’s foreign exchange reserves have crossed $25 billion mark for the first time as the Bangladesh Bank’s purchase of US dollars from local banks surpassed $3.72 billion in the current financial year till Thursday amid slow business. A BB official said that the reserves stood at $25.02 billion on Thursday as the BB kept intervening into the foreign exchange market so that the taka remained stable against the dollar amid lack of demand for the greenbacks. The central bank purchased greenbacks worth $84 million from the local banks on Thursday, taking the total dollar buy to $3.72 billion between July 1 and June 25 of the financial year 2014-2015. The reserves crossed $24 billion mark on April 28. ‘The demand for dollars has continued to be sluggish for the last few months as the business activities have yet to pick up after months of political unrest and uncertainty,’ said a BB official. He said that slide in import payment in the last three months and relatively good growth in remittance inflow helped increase in circulation of dollars in the country despite slower growth in export earnings. He said that the BB had to purchase dollars to halt the slide of the greenbacks against the taka. Former interim government finance adviser Mirza Azizul Islam on Thursday told New Age that ‘big-but-idle’ foreign exchange reserves would not bring any positive impact on the economy. ‘So, there is no scope to be happy due to the large amount of reserves as such type of idle asset is burden for the developing countries like Bangladesh,’ he said. The central bank has been continuously purchasing greenbacks from the banks which are facing lower demand due to sluggish business, he said. The BB purchased greenbacks worth around $13.40 billion from the local banks between FY13 and FY15 to keep the taka stable against the dollar, he said. Former BB governor Salehuddin Ahmed told New Age that the government should take initiative to strengthen the country’s business capability so that the financial sector utilise the idle greenbacks in the productive sector. Otherwise, the BB will be forced to continue to purchase the dollar to manage exchange rate between taka and greenbacks. The exchange rate of US dollar has remained stable at around Tk 77.80 in the inter-bank forex market in the last few months due to the central bank’s repeated intervention. The BB data showed that the central bank had purchased $5.15 billion in the FY 14 and $4.53 billion in the FY13 from the scheduled banks. News Courtesy: www.newagebd.net