The country's foreign exchange reserve rose close to US$ 7.0 billion mark for the first time due to a slackened private sector investment, causing worry among the central bank executives about a manufacturing setback in the near future, reports UNB.

Bangladesh Bank sources said the forex reserve stood its highest ever level at US$ 6.94 billion at the closing Sunday showing signs that the reserve would cross the US$ 7.0 billion mark within a day or two.

A senior central bank executive said that a slowdown in the private sector investment had contributed to the increase of reserve to that level. But they were worried due to the slackened investment in the private sector, he added.

The slow growth of import of capital machinery and industrial raw materials reflects a declining trend of the private sector investment.

The Bangladesh Bank executive, however, said the price of industrial raw materials declined but not the volume to show less import cost while the trend of capital machinery import was difficult to understand as the importers never declared the actual value.

"Obviously, the slowdown is due to the global recession," he said, replying to a question. He added that the private sector entrepreneurs were in dilemma whether they would invest amid uncertainty of demands for their products in a situation of worldwide slowdown.

Replying to another question, the executive said it would be better to wait for the private sector, which would be more efficient in using the huge reserve than the public sector. "Public sector can also utilise the fund, but it would be less efficient."

He said the sharp drop in the prices of essential commodities and decline in import volumes also helped increase the reserve.

Inflow of foreign remittance through formal channel gave an extra push as the necessity for sending remittance through informal channel like "hundi" diminished due to the global recession, the Bangladesh Bank executive added.

Latest Bangladesh Bank figures shows significant increase in opening of import L/Cs for intermediate goods and machinery for miscellaneous industry during July-April of fiscal 2008-'09 compared to the same period of the preceding year.

But opening of import L/Cs for consumer goods, capital machinery, petroleum and petroleum products, and industrial raw materials declined during the July-April period of fiscal 2008-'09 compared to the same period of the preceding year.