The New Nation - Internet Edition

BUSINESS REPORT

Country's foreign exchange reserves will cross US$10 billion (1,000 crore) within the next two years, said Bangladesh Bank Governor Dr Salehuddin Ahmed.

He said huge number of manpower was exported abroad in the last one year. Since they have been sending remittances, reserve position is getting consolidated day by day. Bangladesh's reserve position is much better compared to those of neighbouring countries, including India and Pakistan.

The Governor was talking to journalists at his office at the Bangladesh Bank Thursday afternoon.

According to the statistics of the Foreign Exchange Department of Bangladesh Bank, foreign exchange reserves amounted to US$6.0137 billion (601.37 crore) till Thursday.

Responding to a criticism that the central bank is holding the reserves, Dr Salehuddin said Bangladesh Bank has constantly been releasing funds from the reserves to the market. Funds from the reserves are being used to import food and fuel oil. Even, Agrani Bank Limited was given Tk 38.49 crore on Thursday to import fuel oil.

The Governor said confidence in trade and investment comes back if the reserve position remains consolidated. It becomes possible to make international payment for import trade.

When asked why the foreign direct investment (FDI) was not coming to the country despite the existence of a good reserve position, the Bangladesh Bank Governor said excessive dependence on FDI is not right, because the money that comes through the FDI is repatriated by investors.

Dr Salehuddin said steps have been taken to attract the hard-earned foreign currency remitted by expatriate Bangladeshis to the productive sectors instead of unproductive sectors. "We want that the money received from remittances is invested in small and medium enterprises in rural areas," he said.

The Bangladesh Bank statistics shows that foreign exchange reserves amounted to US$4.8 billion (480 crore) in the first week of March last year. The reserves have increased by US$2.20 billion (220 crore) in one year. In February this year the expatriate Bangladeshis sent remittances worth US$68 crore to the country, while in the previous month of January remittances worth US$71.54 crore, which was a record amount in the country's history of remittance.

Economists think that foreign exchange reserve position is being strengthened because of the increase of overall remittance flow to the country.

In January 2007, average foreign exchange reserves amounted to US$3.73 billion. Since then the foreign exchange reserves have been rising. The foreign exchange reserves crossed US$4 billion mark in February this year. In June this year the reserves crossed US$5 billion.

Sources at Bangladesh Bank attributed the rising trend in foreign exchange reserves to the formulation of Money Laundering Act 2002 by the government. Since then the flow of remittances through the banking channel has been increasing.

Besides, the expatriate Bangladeshis are preferring to send remittances through legal channels as the rate of dollar has been rising against Bangladesh taka during the last one and a half years.