Abstract:
In recent days rapid accumulation of foreign exchange reserve leads to the
rising interest in Bangladesh on the optimal utilization of its backlog. Though our
foreign reserve holding is markedly higher which shows the sum of money is
equivalent to seven months of import payments and sufficient to handle the country’s
import bills for more than seven months in case of any emergency, but different
approaches for foreign reserve adequacy level suggest the immediate steps to its best
use unless it will contribute to a big liability in Bangladesh. There are heaps of
investment opportunities in this emerging country, but cost-benefit analysis should
be restrained in mind while placing the large store. The prospects of foreign
exchange reserve focus in in infrastructural development, Export Development Fund,
financial sector reform, limiting exchange rate flexibility, develop a manpower
exports fund, liberalize the rules concerning outward FDI, buying gold from the
IMF, mobilizing additional FX funds to open FX -dollar denominated- external
account. Research on the different aspects of reserve accumulation is vast but little
has been done in Bangladesh. Against this background, the purpose of the study is to
cater a simple analysis of Bangladesh’s foreign exchange reserve, especially
centering on the reserve position and prospects of it.
