The country’s foreign exchange reserves fell again to a seven-year low. This month, two rounds of reserves fell to the lowest level in the last year.
Earlier on May 8, it fell to its lowest position in the first seven years. Earlier in the financial year 20215-16 the reserve was 3 thousand 35 million dollars. Reserves fell again on Wednesday to $29 billion. On that day, the reserve was 2 thousand 996 million 88 million 30 thousand dollars. That is, 30 million 12 million dollars less than 30 billion dollars.
Earlier on May 8, the reserves fell to $29 billion after the Asian Clearing Union (ACU) debt settlement. Two days after that, i.e. on May 10, after 500 million dollars were discounted for World Bank’s budget support, it increased again to 30 billion dollars when added to the reserves. Within two weeks, reserves fell again to $29 billion. This decline was due to lower dollar accumulation in reserves from export and remittance earnings and increased sale of dollars to meet LC liabilities.
A central bank official expressed optimism, saying the reserves had fallen slightly below $29 billion. Within a day or two it will rise again to 30 billion dollars. Because the flow of remittances sent by expatriates is expected to increase on the occasion of the upcoming Qurbani Eid.
According to sources, the country’s foreign exchange reserves on April 30 were 3,960 million dollars. According to this, in 24 days the reserve has decreased by about 100 million dollars. In the same period of last year, the reserve was 4 thousand 229 million dollars. Reserves have decreased by 1 thousand 232 million dollars in a span of one year.
Reserves fell to $2,970 million on May 8 after the Asian Clearing Union (ACU) paid off $1.18 billion in debt. Two days later, on May 10, when the World Bank released 507 million dollars for budget support, the reserve increased again to 3,960 million dollars.
Since then, reserves have continued to decline, falling to $2.997 billion on Wednesday. Reserves are now below $25 billion on a net basis. Because about 5 billion dollars invested in various funds have to be removed from the gross reserves. The central bank is trying to reduce the amount allocated to the fund by another 1 billion dollars and eliminate 4 billion dollars.
With this, two rounds of reserves fell below 30 billion dollars this month. That is the lowest position in seven years. Seven years ago in the financial year 2015-16, the reserve was 3 thousand 35 million dollars.
According to central bank sources, the supply of dollars from reserves has been increased in the banks to meet the import expenses. In contrast, dollar deposits from export earnings and remittances have declined. Due to these reasons the reserve is decreasing.
Meanwhile, to maintain reserves, the central bank is taking stricter measures by imposing stricter controls on imports, releasing foreign currency in less important sectors like foreign travel, medical, education, meeting seminars. At the same time, in order to increase foreign exchange earnings, the participating organizations are taking steps to search for new export markets, increase exports to new markets, bring non-repatriated export earnings back to the country, and increase remittance flow. Besides, it is planned to reduce high interest short-term foreign loans and take more low-interest long-term loans.
The IMF has predicted that the country’s gross reserves may fall to 2,996 kt dollars by next June, which is equivalent to 3 and a half months of total import expenditure. At the same time, the net reserve may come down to 2 thousand 446 crore 20 lakh dollars, which can meet the import expenses of 2.9 months. That is less than three months import cost.
According to sources, as a result of strict control, the monthly import expenditure of the country has come down to 5 billion dollars. 850 million dollars were also spent in the previous month. According to that, the import decreased by 350 million dollars. More controls are being imposed on imports. As a result, the central bank believes that it will be possible to save reserves. Due to the last fast, some relaxation is shown in imports. Now the controls are increasing again. However, there will be relaxation in the import of fuel products and fertilizers. To import these, the supply of dollars from the reserve will be increased.