By Sumi Khan

Dhaka, Feb 25 (IANS): Bangladesh's foreign exchange reserves have hit a new record of over $44.02 billion, thanks to the upward trend in remittances.

The country's remittances stood at $1.49 billion in the first 23 days of February.

Atiur Rahman, former Governor of Bangladesh Bank, told IANS on Thursday morning, "Remittances have played a vital role in boosting the foreign exchange reserves amid the ongoing Covid-19 pandemic."

The rising foreign exchange reserves due to the increased remittances are due to the incentives given to encourage formal transmission and greatly improved digital payment system including mobile financial services and agent banking.

The pandemic has also reduced the outward flow of foreign exchange as a lesser number of people are going abroad now.

Besides, there has been a huge reduction in the import of capital goods and related raw materials to Bangladesh, the former Central Bank Governor added.

Atiur mentioned that exports, though lower, remain positive. So the balance of paymenst remains positive.

The BB continues to mop up foreign exchange from banks through buying of the same to keep the exchange rate stable. This will continue for some more months till imports pick up in full force and economic recovery is fully restored.

The increasing foreign exchange reserves indicate a stronger external economy and should be encouraged to add up as this will help improve the business confidence of foreign direct investors.

Atiur suggested that the Bangladesh government would also remain confident to undertake more infrastructural projects given the added strength of the external economy.

"On the whole there is no need for changing the strategy on foreign exchange management policy at least for another few months till the economy is fully recovered," Atiur added.

To boost exports, the former Governor suggested that if the government wants to use a part of this reserve it should learn from the experiences of how the foreign exchange demand for the Padma bridge was being met as well as how export development fund has been enhanced to boost exports.

He added that the creation of the green transformation fund for the greening of textiles and leather industries should also be looked at by the government to know how foreign exchange reserves can be used in a more innovative way for green growth.

The reserves touched the $41 billion mark on last October 28 and rose to $42 billion on December 15, last year and $43 billion on December 30.

Between July and January of this fiscal year, Bangladesh received $14.9 billion in remittances, up to 34.95 percent a year ago, Bangladesh Bank data showed.

Remittances to Bangladesh stood at $1.49 billion in the first 23 days of February in contrast to $1.24 billion in the same period a year ago.