Abstract:
The foreign reserve crisis has been a burning issue in Bangladesh in recent years. We have the
intention of establishing a relationship between the factors that affect the foreign reserves.
Therefore, we have collected data on our required variables (foreign reserves, export, import, and
remittance) from the WDI from 1997 to 2021 and performed several tests. The ADF test result
implies that the variables are stationary at the first difference, and the result of the cointegrating
test shows all the variables have a long-run equilibrium relationship. The values of the normalized
coefficients indicate that exports and remittances have a positive impact on foreign reserves in
Bangladesh, but imports have a negative impact, as the foreign reserve crisis has been developing
day by day in Bangladesh. Therefore, the government should take the necessary steps to reduce
the level of the crisis.
