Higher import payments put pressure on forex reserve

FE Report brThe pressure on the country's foreign exchange reserve is mounting gradually due mainly to higher import payments for petroleum products, fertiliser and food grains. brThe foreign exchange reserve faces pressure as import payments for fuel oils, fertiliser and food grains are increasing, a senior official of the Bangladesh Bank (BB) told the FE Thursday. brBesides, the falling inflow of remittance in August compared to the previous month also pushed the pressure on foreign exchange reserve further, the official added. brThe central bank is providing support to the commercial banks particularly the state-owned commercial banks (SCBs), using different monetary tools like overdraft (OD) facilities, aiming to keep the country's inter-bank foreign exchange market stable. brThe BB provided OD facilities of US$38 million more Thursday to a SCB for settlement of its fuel oil import bills, officials said. brOn Tuesday last, the central bank offered OD facilities of $65 million to the same SCB for settlement of its fuel oil, food grains and fertiliser import bills.brThe BB provided OD facilities worth around $700 million from July last to September 4 to the SCBs for making payment of their import bills, according to the officials. brOf the amount, at least $165 million have remained unadjusted with the central bank, they added. brThe central bank has continued its intervention in the inter-bank foreign exchange market by selling and buying US dollar directly and providing such short term facilities to the banks aiming to keep the market stable.brAs part of the intervention, the central bank has bought $9.50 million from the commercial banks recently to keep the country's foreign exchange market stable.brThe country's foreign exchange reserve stood at $5.24 billion Thursday against $5.30 million of the previous day, the BB officials confirmed. brOn Tuesday, the foreign exchange reserve came down to $5.32 billion from $5.96 billion after making a routine payment of $582 million to the Asian Clearing Union (ACU). brThe reserve position is fluctuating because of providing OD facilities to commercial banks and inflow of funds from different sources, another BB official said. brHe also said the central bank will continue to provide foreign currency support to the banks for settlement of import payments for essentials. brMeanwhile, the country's overall import grew by 23.61 per cent during the first month of the current fiscal compared to the corresponding period of the previous fiscal. brImport LCs worth $1.829 billion were settled in the month of July of fiscal 2008-09 as against that of $1.479 billion of the corresponding period of the previous fiscal, according to the central bank statistics.brOn the other hand, the flow of inward remittances fell by 10.69 per cent in August from that of the previous month, as fallout of labour unrest in two Middle Eastern countries compelled a good number of Bangladeshi workers to return home. brThe remittances from Bangladeshi nationals working abroad were estimated at $732.98 million in August this year while in July the remittances were worth $820.71 million, the BB's data showed.