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Reserve crosses $42 billion mark, stock market back on track

After a flurry of troubling economic news throughout the past week, there is some relief in both major sectors of the economy.

After a sharp drop for eight consecutive days, the index of the two exchanges started to rise again and at the same time, foreign exchange reserves exceeded the 42 billion dollar mark.

Although there is no good news regarding commodity prices.

Last week, when the country’s two major stock exchanges began to fall simultaneously, foreign exchange reserves also fell to an 18-month low.

On top of that, the inflation rate also increased to its highest level in the last 18 months.

“Recently, foreign exchange reserves fell slightly below the $42 billion mark, but crossed the $42 billion mark right after to reach $42.30 billion,” said the managing director of the management department. foreign exchange reserves and treasury, Saiful Islam, during an interview with the media. .

Rising spending in dollars for imports and other necessities is putting pressure on the foreign exchange reserves and according to the latest Bangladesh Bank report, after about six working days, a small amount was added to the foreign exchange reserves which then went down. increased to $42.3 billion.

To solve this decline, the government has taken several measures, such as prohibiting foreign visits by officials and suspending development projects that require a large number of imported materials.

Saiful Islam welcomed the government’s measures and informed us that the benefits of these measures will come in the long term.

Bangladesh had a record foreign reserve of $48.02 billion in August last year.

Likewise, the latest instructions from the regulator Bangladesh Securities and Exchange Commission (BSEC) regarding margin lending limit and various directives from the Minister of Finance to restore normality in the stock market have borne fruit.

Finance Minister AHM Mustafa Kamal in a meeting with Bangladesh Bank (BB) Governor Fazle Kabir and other senior ministry officials asked them to work on boosting stock market investments.

“Bangladesh’s economy is on a solid foundation and the growth position is very positive, but an unstable stock market situation is not acceptable. Despite the Russian-Ukrainian war and the Covid-19 pandemic, Bangladesh’s economic growth will continue,” he said.

Kamal on Sunday gave several directives to Bangladesh Bank and the Bangladesh Security and Exchange Commission (BSEC) for immediate implementation to boost the stock market.

In order to attract capital to the market, the public investment institution ICB has been instructed to keep the bank’s investment outside the investment limit or exposure limit of this institution on the capital market.

It was also decided to double the size of the Tk 1.5 billion funds granted to the ICB for small investors, which had expired.

The Minister of Finance has requested an increase in the duration of the funds as well as a doubling of the size of the funds. Investments will be made from this fund from Monday, finance ministry sources said.

After these decisions, the Dhaka Stock Exchange (DSE) – Bangladesh’s largest stock market, rose 1.93% on Monday, the second trading day of the week.

In contrast, the Chittagong Stock Exchange (CSE) gained 1.78%.

Market insiders advised that the stock market slowdown began in the second week of May as global market instability and the rising value of the dollar spooked investors.

A sell-off sent indices falling for eight straight days and over those eight days the DSE fell 555.4 points or 8.29%.

On Sunday, the BSEC increased the margin lending limit in a bid to increase market liquidity and counter the recent stock market decline.

The loan limit has been raised from 80% to 100%, meaning investors can now get 100% of their investment as a loan.

On the DSE, 343 stocks were up, 19 were down and 14 were unchanged.

However, the turnover of the first exchange fell by 3% to Tk 658 crore.

Paramount Textiles leads the list of winners which rose 9.94%. S Alam Cold Rolled Steels, Midas Finance, National Feed Mills and VFS Thread were on the list.

Shares of Bangas Ltd fell the most by 4.78%, while RD Food, Dhaka Insurance, International Leasing Financial Services and Bangladesh National Insurance were among the other losing companies.

Beximco Ltd became the most traded stock with shares worth Tk 48 crore changing hands, followed by Shinepukur Ceramics, JMI Hospital, Bangladesh Shipping Corporation and IPDC Finance.

The Chittagong Stock Exchange (CSE) also rose today. CASPI, the port city’s all-stock stock price index, edged up 322 points, or 1.78%, to 18,400.

Of the 274 stocks traded, 207 rose, 51 fell and 16 were unchanged.

Regarding equity market volatility, an anonymous BSEC commissioner told the Dhaka Tribune: “The market was down because investors were panicking. But eventually, he’s back on track.

“But the market cannot continually decline in this way for economic reasons. Our economy is not in such bad shape, and whatever economic pressures we currently find ourselves in, they did not happen overnight.

“I think the recent government decision has helped the market. but the fall in the stock market in recent days is unusual. It should be investigated whether a particular circle is behind this auction in a planned way,” the commissioner added.