There's nothing to worry about global turmoil, says BB
Wednesday, 15 October 2008
FE Report
The central bank has ruled out the possibility of any adverse impact of the ongoing global financial turmoil falling on the domestic financial sector saying that a series of precautionary measures have already been taken to protect the country's foreign currency investments aboard.
"We're absolutely protected. There is nothing to worry about the international financial turmoil," Deputy Governor of Bangladesh Bank (BB) Ziaul Hassan Siddiqui told a press briefing at the central bank Tuesday.
He also said the central bank will reinvest its foreign currency funds after volatility in the global financial market is restored fully.
"The central bank must do it. We'll do it as soon as we'll feel confident," the deputy governor said, adding that the global money and capital markets bounced back in the last two days, which is not enough to consider reinvestment of the fund to get better returns.
"At this moment, we're trying to protect our principal amount," he said while replying to a query.
The BB has invested the entire foreign currency reserve, which stands at US$ 5.58 billion on the day, in most of the central banks across the world at market rates, he noted.
"Most of the country's foreign exchange reserve has already been invested in the central banks in different countries to ensure protection of such fund," he said, adding that the rate of interests on such investments would be 2.0 per cent (average) lower than the market rates.
The central bank, however, has pulled out the investments from the overseas banks and financial institutions to the central banks of the respective countries in the wake of global financial turmoil, Mr. Siddiqui added.
The deputy governor also rejected any possibility of the country's share markets, having foreign portfolio investment of 2.48 per cent of the total securities, being affected.
"Our market will not be affected even if the entire foreign portfolios investment goes away," he observed.
The deputy governor, however, said he does not think that the investment would go away as Bangladesh's financial sector is much less riskier than anywhere else at the moment.
Rejecting any possibility of intervention using monetary tools like other countries, Siddiqui said the ground reality was that many commercial banks went to the central bank on the day to deposit their money reflecting that there was excess liquidity in the banking system.
He also said that the central bank would still maintain the cautious stance to avert any emerging situation although all the deposits have already been protected.
"There is no reason of adverse impact on the country's financial sector following the global financial crisis," he said, mentioning the steps the central bank had taken earlier.
Mr. Siddiqui said the BB has transferred the foreign currency holdings to safer places, while local commercial banks have been advised to take precautionary measures to protect their foreign currency held outside Bangladesh.
Meanwhile, the countries severely affected by the financial crisis also assured that they would, by any means and whatever may be the cases, protect the deposits with banks and financial institutions of their countries.
"We're now in a position that we've bare, bare minimum risk even if the countries do not support us," he added.
The central bank has ruled out the possibility of any adverse impact of the ongoing global financial turmoil falling on the domestic financial sector saying that a series of precautionary measures have already been taken to protect the country's foreign currency investments aboard.
"We're absolutely protected. There is nothing to worry about the international financial turmoil," Deputy Governor of Bangladesh Bank (BB) Ziaul Hassan Siddiqui told a press briefing at the central bank Tuesday.
He also said the central bank will reinvest its foreign currency funds after volatility in the global financial market is restored fully.
"The central bank must do it. We'll do it as soon as we'll feel confident," the deputy governor said, adding that the global money and capital markets bounced back in the last two days, which is not enough to consider reinvestment of the fund to get better returns.
"At this moment, we're trying to protect our principal amount," he said while replying to a query.
The BB has invested the entire foreign currency reserve, which stands at US$ 5.58 billion on the day, in most of the central banks across the world at market rates, he noted.
"Most of the country's foreign exchange reserve has already been invested in the central banks in different countries to ensure protection of such fund," he said, adding that the rate of interests on such investments would be 2.0 per cent (average) lower than the market rates.
The central bank, however, has pulled out the investments from the overseas banks and financial institutions to the central banks of the respective countries in the wake of global financial turmoil, Mr. Siddiqui added.
The deputy governor also rejected any possibility of the country's share markets, having foreign portfolio investment of 2.48 per cent of the total securities, being affected.
"Our market will not be affected even if the entire foreign portfolios investment goes away," he observed.
The deputy governor, however, said he does not think that the investment would go away as Bangladesh's financial sector is much less riskier than anywhere else at the moment.
Rejecting any possibility of intervention using monetary tools like other countries, Siddiqui said the ground reality was that many commercial banks went to the central bank on the day to deposit their money reflecting that there was excess liquidity in the banking system.
He also said that the central bank would still maintain the cautious stance to avert any emerging situation although all the deposits have already been protected.
"There is no reason of adverse impact on the country's financial sector following the global financial crisis," he said, mentioning the steps the central bank had taken earlier.
Mr. Siddiqui said the BB has transferred the foreign currency holdings to safer places, while local commercial banks have been advised to take precautionary measures to protect their foreign currency held outside Bangladesh.
Meanwhile, the countries severely affected by the financial crisis also assured that they would, by any means and whatever may be the cases, protect the deposits with banks and financial institutions of their countries.
"We're now in a position that we've bare, bare minimum risk even if the countries do not support us," he added.