Exchange rate won't be disturbed now
Saturday, 18 October 2008
Bangladesh Bank governor Salehuddin Ahmed Friday ruled out the possibility of any immediate readjustment of exchange rate in the backdrop of ongoing financial crisis, report agencies.
Speaking to reporters at Zia International Airport, on his return from Washington DC, the central banker governor said: "Unless there is an urgent necessity, we want to keep it (exchange rate) that way."
Replying to a question, Dr Saleuddin said the central bank would give a careful consideration to the exchange rate as the Taka has remained stable for quite a long time.
Local manufacturers and exporters already expressed concern over the possibility of losing competitiveness in the global market, as their respective currencies depreciated against the dollar due to the crisis.
"We'll have to look at the import costs as well," said the Governor, adding that the impact of exchange rate on inflation also deserves a serious consideration. "We don't want to 'disturb' the exchange rate at this moment."
He, however, recognized that the country's exports would be affected in the long term because of global financial crisis, but said, "There is a silver lining that we export low end products."
Dr Salehuddin said multilateral donors like the World Bank and the IMF would not cut their assistance to Bangladesh in the wake of the global financial crisis.
"They won't cut aid from their commitment, rather they would try to increase it, if possible."
Local economists and business leaders have expressed the dear that the flow of foreign assistance would slow down because of the global financial meltdown.
On the sidelines of the Annual Meetings, the BB governor rang the alarm bell at an international roundtable on "the Impact of Financial Crisis in South Asia" that a slowdown in official development assistance (ODA) and bilateral fund flow would mount pressure on the government's fiscal management in Bangladesh.
It has the potential to affect the ongoing poverty alleviation, social safety net, health and education programmes, he added.
About the global financial turmoil, he said the impact would not hit "our financial sector because of a number of reasons. He, however, did not elaborate.
The governor said the global financial crisis originated from enforcement of regulations while investment banks and insurance companies were allowed excessive freedom. "They'll now understand the impact of leaving regulation on market."
Asked whether the Bangladesh Bank would go for tightening further the country's financial sector taking lessons from the global financial crisis, the governor avoided a direct answer and said,
"They (the affected countries) followed the core risk and Basel-II requirements theoretically, not practically. But, we tried to follow the principles in practice," he said, adding that one cannot do anything with numbers.
"You have to have exercise judgment, you cannot do everything mechanically," he said.
"Donors have lauded the stability of Bangladesh's macro-economic fundamentals, relatively low inflation rate and the constant 6 percent growth rate," he added.
On the impact of global financial turmoil, he told newsmen that the Bangladeshi economy is not likely to suffer any immediate effect.
"However, the export sector and inflow of ODA (overseas development assistance) may witness some downturn due to the financial crisis," added the Bangladesh Bank boss.
Speaking to reporters at Zia International Airport, on his return from Washington DC, the central banker governor said: "Unless there is an urgent necessity, we want to keep it (exchange rate) that way."
Replying to a question, Dr Saleuddin said the central bank would give a careful consideration to the exchange rate as the Taka has remained stable for quite a long time.
Local manufacturers and exporters already expressed concern over the possibility of losing competitiveness in the global market, as their respective currencies depreciated against the dollar due to the crisis.
"We'll have to look at the import costs as well," said the Governor, adding that the impact of exchange rate on inflation also deserves a serious consideration. "We don't want to 'disturb' the exchange rate at this moment."
He, however, recognized that the country's exports would be affected in the long term because of global financial crisis, but said, "There is a silver lining that we export low end products."
Dr Salehuddin said multilateral donors like the World Bank and the IMF would not cut their assistance to Bangladesh in the wake of the global financial crisis.
"They won't cut aid from their commitment, rather they would try to increase it, if possible."
Local economists and business leaders have expressed the dear that the flow of foreign assistance would slow down because of the global financial meltdown.
On the sidelines of the Annual Meetings, the BB governor rang the alarm bell at an international roundtable on "the Impact of Financial Crisis in South Asia" that a slowdown in official development assistance (ODA) and bilateral fund flow would mount pressure on the government's fiscal management in Bangladesh.
It has the potential to affect the ongoing poverty alleviation, social safety net, health and education programmes, he added.
About the global financial turmoil, he said the impact would not hit "our financial sector because of a number of reasons. He, however, did not elaborate.
The governor said the global financial crisis originated from enforcement of regulations while investment banks and insurance companies were allowed excessive freedom. "They'll now understand the impact of leaving regulation on market."
Asked whether the Bangladesh Bank would go for tightening further the country's financial sector taking lessons from the global financial crisis, the governor avoided a direct answer and said,
"They (the affected countries) followed the core risk and Basel-II requirements theoretically, not practically. But, we tried to follow the principles in practice," he said, adding that one cannot do anything with numbers.
"You have to have exercise judgment, you cannot do everything mechanically," he said.
"Donors have lauded the stability of Bangladesh's macro-economic fundamentals, relatively low inflation rate and the constant 6 percent growth rate," he added.
On the impact of global financial turmoil, he told newsmen that the Bangladeshi economy is not likely to suffer any immediate effect.
"However, the export sector and inflow of ODA (overseas development assistance) may witness some downturn due to the financial crisis," added the Bangladesh Bank boss.