Searching for a needle in the haystack

It's not unusual for bankers to let slip a wry smile whenever question about liquidity issues. There is almost a mysterious aura about them as they use carefully crafted words to describe the situation in even the most social of situations. So when it is they who pose the question it does take on a different dimension. Apparently there are no clear cut answers to where all the excess liquidity went now that intervention has occurred in the stock market. Everyone knows or talks about the siphoning off of funds from the share market but no one has yet laid a finger on where all the money went. The Taka is not an internationally convertible currency and the fingers are pointing mostly at the 'hundi' market with neighbouring countries to fund the informal trade that exists in huge volumes. Then of course the devaluation of the Taka makes it all more confusing. The Bangladesh Bank has quickly said it would pump money in to the system so that letters of credits (LCs) for fuel and food imports are not threatened in any way and quietly and softly the banks have raised their deposit rates to search for new funding. One school of thought is suggestive of the fact that businessmen are employing funds by investing in land acquisition as opposed to keeping money in the banks while others are using the curb market and other sources to repatriate funds abroad. With remittances likely to soon fall, partly due to the trouble of the Middle-East, Egypt, Libya and Syria, it can only be a matter of time before foreign exchange (forex) reserves come under pressure especially with a huge import bill looming large. Some time back the commerce minister supported a proposal that would allow local businesses to invest abroad, specifically Africa. The Petrobangla has been authorised to look for coal mines that the country can lease abroad and the Prime Minister is known to favour leasing cultivable land in other countries for growing of staple crops that can then be imported. All well and good but where will the money in hard foreign currency come from? With exports and remittances the two key areas of focus, moves to resuscitate the jute industry provides more than a glimmer of hope. In these days of environment and eco-friendly tastes, this might just be the launch pad of a diversified use of the golden fibre to bolster the economy. Marketing and branding will be supreme but even more than that will be the necessity of product diversity and variety. (The writer can be reached at e-mail : mahmudrahman@gmail.com)