Taka to stay intact against greenback
Friday, 31 October 2008
FE Report
Bangladesh Bank (BB) governor Salehuddin Ahmed dismissed Thursday the possibility of immediate depreciation of taka in the backdrop of the ongoing global financial meltdown.
"There could be sector-specific policy changes to help some export industries tide over their problems, nothing more", the central bank governor told newspaper editors and a group of senior journalists during an exchange- of-opinion session held at the conference room of the bank.
Ruling out any major impact of the financial market turmoil on Bangladesh economy, Dr. Salehuddin said, "Bangladesh is not that much integrated (with the global financial market). But we are not isolated also."
Explaining the major reasons for Bangladesh remaining immune to outside troubles, he said the size of the foreign portfolio investment in the stock market has been as low as 2.5 per cent and the central bank has not allowed any short-term foreign fund flow into the country.
"One cannot, however, rule out the possibility of reduced inflow of foreign direct investment and official development assistance in the aftermath of the worst economic meltdown", he said.
He felt that the job of monitoring the developments and its possible impact on the country was not the sole responsibility of the central bank. The government agencies concerned and the central bank would have to work in close cooperation in this respect since the issue involves the macro-economy, he said.
The BB, he said, while performing its job as a regulator is trying to insulate the real sectors of the economy from the global financial market meltdown. This why increased emphasis is being given to increase credit flow to agriculture sector, small and medium enterprises (SMEs) and units run by women entrepreneurs.
Asked if the ongoing erosion in prices of a number of commodities in the international market would leave an adverse impact on the local banks, the governor said the central bank is monitoring the price situation.
He, however, said if the importers could reap profits out of the sudden rise in the prices of commodities in the global market, they should also be prepared to sacrifice a part of the profit in the event of price erosion of the same.
Dr. Salehuddin admitted that following the anti-graft drive there had been a sort of uneasiness in the country's banking sector. "Actually, most depositors, both innocent ones and wrongdoers, got panicky. But that situation does not exist anymore and the banking sector is vibrant as before", he said.
He defended the central bank's move to restrict credit flow to unproductive areas, including consumer credit and credit card use. "May be the use of credit card is not that significant now. But it may go up anytime", he said.
Dr. Salehuddin, referring to the reforms implemented over the last few years, expressed the hope that there would be stability in the policy stances in the future.
In this context, he said, the BB has tried to pursue a 'prudent' monetary policy in recent years.
The BB governor said since Bangladesh expatriates are mostly employed in the Middle Eastern countries, the inflow of remittance may not be affected by the ongoing global financial crisis. He, however, said, the Bank is constantly monitoring the inflow.
He said the size of the non-performing loans in the banking sector now stands at 13 per cent of the total outstanding loans.
When asked, Dr. Salehuddin refused to comment on the Trust Bank foreign exchange transactions issue since 'it is a legal matter involving two individuals".
BB deputy governors Nazrul Huda, Ziaul Hassan Siddiqui and Murshid Kuli Khan, senior consultant Allah Malik Kazemi and other high officials were present on the occasion.
Bangladesh Bank (BB) governor Salehuddin Ahmed dismissed Thursday the possibility of immediate depreciation of taka in the backdrop of the ongoing global financial meltdown.
"There could be sector-specific policy changes to help some export industries tide over their problems, nothing more", the central bank governor told newspaper editors and a group of senior journalists during an exchange- of-opinion session held at the conference room of the bank.
Ruling out any major impact of the financial market turmoil on Bangladesh economy, Dr. Salehuddin said, "Bangladesh is not that much integrated (with the global financial market). But we are not isolated also."
Explaining the major reasons for Bangladesh remaining immune to outside troubles, he said the size of the foreign portfolio investment in the stock market has been as low as 2.5 per cent and the central bank has not allowed any short-term foreign fund flow into the country.
"One cannot, however, rule out the possibility of reduced inflow of foreign direct investment and official development assistance in the aftermath of the worst economic meltdown", he said.
He felt that the job of monitoring the developments and its possible impact on the country was not the sole responsibility of the central bank. The government agencies concerned and the central bank would have to work in close cooperation in this respect since the issue involves the macro-economy, he said.
The BB, he said, while performing its job as a regulator is trying to insulate the real sectors of the economy from the global financial market meltdown. This why increased emphasis is being given to increase credit flow to agriculture sector, small and medium enterprises (SMEs) and units run by women entrepreneurs.
Asked if the ongoing erosion in prices of a number of commodities in the international market would leave an adverse impact on the local banks, the governor said the central bank is monitoring the price situation.
He, however, said if the importers could reap profits out of the sudden rise in the prices of commodities in the global market, they should also be prepared to sacrifice a part of the profit in the event of price erosion of the same.
Dr. Salehuddin admitted that following the anti-graft drive there had been a sort of uneasiness in the country's banking sector. "Actually, most depositors, both innocent ones and wrongdoers, got panicky. But that situation does not exist anymore and the banking sector is vibrant as before", he said.
He defended the central bank's move to restrict credit flow to unproductive areas, including consumer credit and credit card use. "May be the use of credit card is not that significant now. But it may go up anytime", he said.
Dr. Salehuddin, referring to the reforms implemented over the last few years, expressed the hope that there would be stability in the policy stances in the future.
In this context, he said, the BB has tried to pursue a 'prudent' monetary policy in recent years.
The BB governor said since Bangladesh expatriates are mostly employed in the Middle Eastern countries, the inflow of remittance may not be affected by the ongoing global financial crisis. He, however, said, the Bank is constantly monitoring the inflow.
He said the size of the non-performing loans in the banking sector now stands at 13 per cent of the total outstanding loans.
When asked, Dr. Salehuddin refused to comment on the Trust Bank foreign exchange transactions issue since 'it is a legal matter involving two individuals".
BB deputy governors Nazrul Huda, Ziaul Hassan Siddiqui and Murshid Kuli Khan, senior consultant Allah Malik Kazemi and other high officials were present on the occasion.