Al Amin :
The government is desperately trying to prevent the country’s foreign exchange reserve erosion in order to meet the growing demand for US dollar amid a sharp rise in post-pandemic economic activities.
The reserve has declined to $42 billion, which is enough for settling five months export payments, from $48 billion.
Following the erosion, the government has taken various steps including devaluation of local currency against dollar to facilitate exporters, discouraging imports of luxurious and cosmetic goods, restriction on official tours, and relaxation documents to increase inflow of remittance.
Eminent economist Prof Abu Ahmed told The New Nation on Tuesday, “The initiatives, government has taken already, were urgently needed to save the FX reserve, which is very important for a country.”
The government should also impose restriction on tours of private individual to save dollar, he said.
The Bangladesh Bank has depreciated the local currency five times this year and the official rate is Tk 87.50 a dollar, up from Tk 84.80 a year ago, although the measure still failed to reduce the demand for the dollars.
Mustafizur Rahman, a Distinguished Fellow of the Centre for Policy Dialogue (CPD), said, “The central bank should have depreciated the taka gradually over the years, but it did not do so fearing inflation, that is why a pent-up pressure developed in the dollar market.”
On the other hand, the National Board of Revenue (NBR) slapped up to 20 percent regulatory duty on around 135 products as part of the government’s broader objectives to discourage imports and contain volatility in the foreign exchange market.
The items include cosmetics, flowers, fruits and furniture, according to a regulatory order issued on Tuesday.
“We have taken this measure to discourage imports and to reduce demand for foreign currencies,” NBR officials said.
Earlier, Bangladesh Bank instructed banks to take up to 75 per cent of import payments in advance from businesses to open letters of credit (LCs) for luxury and non-essential goods.
The number of credit bonds or LCs for importing goods is increasing unusually. In the first nine months (July-March) of the current fiscal year, traders have opened LCs worth $ 68.36 billion, up by 46.04 per cent than the same period of last year.
The value of the LCs stood at Tk 5.89 trillion which is close to the national budget of the current fiscal year as the global price hike of commodities, edible oil and fossil fuel also pushed up dollar demand as payment volume increased for the same volume of goods as earlier.
The import spending has put pressure on foreign exchange. In this situation, the economists have suggested curbing imports.
In such a situation, Bangladesh Bank is selling dollars so that no bank has any problem in paying the import bills.
Besides, the government has given unlimited investment opportunities in ‘dollar bonds’ to increase the supply of dollars.
The interest rate on these bonds for expatriates has also been reduced. This will reduce the outflow of dollars from the country in the form of interest. If the investment in this bond increases again, the dollar will enter the country.
On the other hand, the central bank on Monday relaxed the rules related to a 2.5 per cent cash bonus offered as an incentive to remitters if they send money home through official channels.
From now, the non-resident Bangladeshis (NRBs) and migrant workers would not be required to present documents when sending $5,000 or Tk 5,00,000 and above as remittance in order to qualify for the government incentive.
