Kazi Zahidul Hasan :
Economic analysts on Friday called for more rationally managing the country’s foreign exchange reserves, which swelled over US$30 billion recently.
They said, the rising foreign exchange reserve reflects Bangladesh’s economic strength, but warned that a high level foreign exchange (forex) reserve held by the central bank has also downslide risks if it is not properly utilised.
The buildup of foreign exchange reserves is largely a result of growing exports and foreign exchange controls by the central bank as well as steady inflows of foreign remittance, according to Bangladesh Bank (BB) officials.
“Surplus foreign exchange reserve is nothing but a burden for the economy when an investment crunch prevails in the country.” Dr AB Mirza Azizul Islam, a leading economist of the country, told The New Nation on Friday.
He said, the idle reserve should be brought into investment to reap its maximum economic benefit.
“Part of the reserves should be channeled into investment through financing the
imports of high-tech machinery, equipment and other products. The hefty foreign exchange reserves can also be diverted for domestic investment and consumption,” he suggested.
Dr AB Mirza Azizul Islam, a former finance adviser of the Caretaker Government warned that an improper management of foreign reserve could push up inflation and appreciation value of local currency. A rising value of currency could adversely affect export earnings and competitiveness of local goods in the international market.
“So, BB should properly mange the reserve to lower the economic risks,” he said.
The international consensus is that a country’s rational foreign exchange reserves should be equal to its imports demand for a full quarter. But the present holding of Bangladesh’s foreign exchange is enough to foot the country’s import bills for at least eight months.
“The rise of foreign exchange reserves reflects Bangladesh’s economic strength, sustained and sound international payments,” Dr Khandoker Ibrahim Khaled, a former Deputy Governor of BB told The New Nation yesterday
He added: The hefty reserve also contributes to upgrade the country’s image in the international economic arena and guard it against external financial shocks.
“Holding such a big reserve is meaningless, if the central bank fails to fetch the yields from reserves,” Dr Salehuddin Ahmed, former BB Governor told The New Nation yesterday.
He said, the current level of forex is beyond our needs and it is damaging for the economy. “The large and excessive reserve does not yield benefits on the economy unless it could be diverted into the investment to productive sectors,” he added.
Dr Salehuddin Ahmed also mentioned if the excess reserve could not be channeled through investment it will put downslide risks on the economy.
He urged the central bank to offer incentives on export diversification and import substitute industries to utilize excess reserve. This move can boost industrial production and create more jobs.
Economic analysts on Friday called for more rationally managing the country’s foreign exchange reserves, which swelled over US$30 billion recently.
They said, the rising foreign exchange reserve reflects Bangladesh’s economic strength, but warned that a high level foreign exchange (forex) reserve held by the central bank has also downslide risks if it is not properly utilised.
The buildup of foreign exchange reserves is largely a result of growing exports and foreign exchange controls by the central bank as well as steady inflows of foreign remittance, according to Bangladesh Bank (BB) officials.
“Surplus foreign exchange reserve is nothing but a burden for the economy when an investment crunch prevails in the country.” Dr AB Mirza Azizul Islam, a leading economist of the country, told The New Nation on Friday.
He said, the idle reserve should be brought into investment to reap its maximum economic benefit.
“Part of the reserves should be channeled into investment through financing the
imports of high-tech machinery, equipment and other products. The hefty foreign exchange reserves can also be diverted for domestic investment and consumption,” he suggested.
Dr AB Mirza Azizul Islam, a former finance adviser of the Caretaker Government warned that an improper management of foreign reserve could push up inflation and appreciation value of local currency. A rising value of currency could adversely affect export earnings and competitiveness of local goods in the international market.
“So, BB should properly mange the reserve to lower the economic risks,” he said.
The international consensus is that a country’s rational foreign exchange reserves should be equal to its imports demand for a full quarter. But the present holding of Bangladesh’s foreign exchange is enough to foot the country’s import bills for at least eight months.
“The rise of foreign exchange reserves reflects Bangladesh’s economic strength, sustained and sound international payments,” Dr Khandoker Ibrahim Khaled, a former Deputy Governor of BB told The New Nation yesterday
He added: The hefty reserve also contributes to upgrade the country’s image in the international economic arena and guard it against external financial shocks.
“Holding such a big reserve is meaningless, if the central bank fails to fetch the yields from reserves,” Dr Salehuddin Ahmed, former BB Governor told The New Nation yesterday.
He said, the current level of forex is beyond our needs and it is damaging for the economy. “The large and excessive reserve does not yield benefits on the economy unless it could be diverted into the investment to productive sectors,” he added.
Dr Salehuddin Ahmed also mentioned if the excess reserve could not be channeled through investment it will put downslide risks on the economy.
He urged the central bank to offer incentives on export diversification and import substitute industries to utilize excess reserve. This move can boost industrial production and create more jobs.
