Bangladesh central bank chief says depleting forex reserves are no cause for concern

Bangladesh Bank Governor Fazle Kabir has identified controlling inflation and dollar exchange rates as prime challenges facing the economy.

Speaking at a seminar on Saturday at the Bashundhara International Convention Centre, Kabir said the foreign exchange reserves slipping is “no reason to be alarmed”.

The challenge to manage inflation and the dollar rate has arrived at a time, he said.

With Sri Lanka struggling with the worst economic crisis in its history, Bangladesh is in a “comfort zone” in terms of foreign exchange reserves size, Kabir added

“We are in surplus. Reserves are declining… It was bigger before. But it is no cause for concern.”

Kabir, however, suggested that bankers stay on guard. “In the [2020-21] financial year, we bought more dollars. But we are selling [more] this time around. We’ve used up more dollars in imports to provide support to the government in bringing in fertiliser, oil and food, among other goods.”

This put pressure on the reserves, he said.

Bangladesh’s reserves slipped from a little over $48 billion in August last year to $41.5 billion at present.

The taka is fast losing value against the dollar amid the demand-supply crunch and the rising import expenditures. The dollar was priced at Tk 84.8 in June last year but it is now being exchanged at Tk 92.85.

According to the International Monetary Fund, if a country has enough reserves to meet import expenditures for three months, it has a good repayment capacity.

“We need $7 billion every month to meet import expenditures. Along with some government requisites and services, we need to pay up a maximum of $26 billion [from reserves] in three months.