Banna Banik will conduct an analysis on the impact of energy price shocks on Bangladesh's foreign exchange reserves and remittance inflows.
This study investigates the stabilizing role of remittances on Bangladesh's foreign exchange reserves (FXR) amid energy price shocks, using a Structural Vector Autoregression model to capture interactions among energy prices (ENGP), remittances (REMIT), FXR, and consumer price index (CPI) using time series data from July 2004 to September 2024. The results reveal that energy price shocks negatively impact FXR due to increased import costs, while remittances provide a buffering effect, stabilizing FXR over time. These findings underscore the significance of remittances in enhancing economic resilience in energy-import dependent economies. Policy measures to encourage remittance flows may thus help mitigate FXR volatility driven by global energy price fluctuations, reinforcing Bangladesh's macroeconomic stability.
