The money supply in Bangladesh, specifically the reserve or base money, has decreased significantly. By mid-March, it had fallen to Tk 3.3 trillion, an 11.86% decline from June 2023. This reduction stems from a halt in printing ‘high-powered’ money, impacting the central bank’s ability to engage in devolvement operations (money printing) and maintain reserve levels. Notably, net foreign assets decreased due to the sale of US dollars to meet urgent liabilities, affecting the country’s dollar reserves. Economists view this reduction in reserve money positively as it helps curb inflation. They suggest that each taka increase in reserves can magnify the economy by five times, yet caution against relying on reducing dollar reserves alone. The inflation rate, despite these measures, remains high, especially in food prices. The government’s reduced borrowing due to international financial assistance has alleviated some monetary pressures. However, economists stress the need for a balanced approach to managing monetary policy amidst economic volatility and inflationary challenges.
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