Research and Writings

Md. Jaynul Abedeen (2019), Foreign Exchange Reserve Management in Central Banks: Adequacy and Risk-Return Appetite Issues Related to Bangladesh Bank, Ma. Diss., Pathum Thani: Asian Institute of Technology.

October 3, 2019

Abstract: The foreign exchange reserve of Bangladesh, as well as economy, is growing unprecedently in the recent years. But a downward trend is seen in the total export earnings which implies that Bangladesh may come across a crisis in near future because of the dependency on the single export earnings sector- the ready-made garments industries. Technological development shift of buyer’s choice, artificial intelligent, etc. are making the target export countries more interested in reshoring or onshoring and nearshoring garments industries which they used to do by offshoring in the past. If they start doing so, Bangladesh will face a deep crisis because, almost 80% of its export earnings comes from this sector. To confront such abrupt crisis, sufficient foreign exchange reserves should be accumulated. But how much forex reserves Bangladesh should hold and what will be the cost and benefits of holding forex reserves – this put forward the important aspect of this paper, the adequacy of foreign exchange reserve of Bangladesh. The informal analysis of this paper proclaims it clearly that Bangladesh is holding significantly more than adequate level of foreign exchange reserves.