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Pressure on the foreign exchange reserves remains high as the deficit in the
financial account continues to widen despite the narrowing trade gap and a current
account surplus. At the end of October, the deficit in the financial account stood at
$3.96 billion, in contrast to $1.27 billion a year earlier, as per the latest data from
Bangladesh Bank. The financial account is the component of the country's balance
of payments that cover claims or liabilities to non-residents concerning financial
assets. Its components include foreign direct investment, medium and long-term
loans, trade credit, net aid flows, portfolio investment and reserve assets.
Typically, a deficit in the financial account means more investments are flying out
of the country than coming in and is a major factor behind the running down of
foreign exchange reserves. At the end of October, the country's gross reserves
stood at around $20.6 billion, down from $27.5 billion a year earlier. The country's
dollar stockpile has shrunk further: as of November 29, which is the latest
published data by the BB, reserves stood at $19.40 billion. Forex reserves would
not decrease further in December because more than one billion dollars are
expected from the International Monetary Fund and the Asian Development Bank,
BB Spokesman Md Mezbaul Haque told journalists yesterday.