What is the national sovereign foreign exchange reserve requirement target typically maintained by Bangladesh Bank to cover monthly import bills?
Answer and explanation
Correct answer: A. at least three months of projected imports
- Step 1: In international macroeconomics and balance-of-payments management, central banks maintain liquid foreign exchange reserves as a buffer against external trade shocks. Step 2. The standard international prudential benchmark adhered to by Bangladesh Bank is maintaining sufficient usable foreign currency to cover at least three months of projected merchandise imports. Answer: at least three months of projected imports. Why not the others: Six months of projected imports is an exceptionally conservative luxury benchmark held by petro-states; Twelve months represents an excessive sovereign holding typical of export-surplus economies like Taiwan; One month of imports is an acute crisis threshold triggering balance-of-payments emergency.
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