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Bangladesh Bank governor meets the press |
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September 12, 2000
Dhaka, --- As long as the economic fundamentals are not on the right track and currency remains overvalued, the country will continue to be import-dependent, says the central bank governor. Local industries would never be competitive on a liberalized market as duties are much lower there on the one hand on the other currency is overvalued at home, Dr Mohammad Farashuddin told newsmen in an informal get-together yesterday (Monday). “It means open invitation to imports, both legal and illegal,” he said to deflate criticism against a recent deep depreciation of the taka and resultant inflation. If value of the taka is not readjusted timely, local production, foreign-exchange reserves and remittances are hampered while import-dependence becomes an inevitable destiny. The central bank chief justified the latest downward adjustment, to the tune of 6 per cent, of the local currency against the US dollar. He felt such adjustments are an important step, but not the only way to improve economic condition unless other issues like infrastructure, law and order are addressed. The central bank top brass categorically said currency price is never refixed on the basis of margin of the kerb market as it does not reflect economic fundamentals. The governor said kerb market is highly manipulative and even only one or two persons can manipulate for immediate benefit. “But no such manipulation takes place within our area of command,” he said, evading a direct reply to what measures the central bank plans to check the speculative trading on the unauthorized money market. Value of taka has been adjusted thrice in the last two years on the basis of real effective exchange rate reviewing the currency prices of 15 trade- partner countries, he explained. “We do it without hesitation when economic fundamental demands. But we face criticism if we do it in small dosages and even if we go for a big adjustment at one stroke,” he said citing press criticisms over 17 times’ devaluation in last four years. Explaining he said the taka was devalued 14 times in two years and three times in last two years, but criticism was there all the same harsh for both the steps. Currency adjustment is targeted to maintaining export competitiveness, expanding local production base and encouraging remittance, he said, adding that devaluation had contributed to the export growth of last two years. |
