THE country’s foreign exchange reserve crossed the $20-billion mark for the first time on Thursday as Bangladesh Bank purchased US dollars worth $8.53 billion in the last 21 months to keep the taka stable against the greenback. BB purchased these dollars from the scheduled banks which were grappling with the dollars because of a lack of demand.
The central bank purchased USD to keep stable the external value of the taka after the Bangladeshi currency had fallen to around Tk 84 a dollar in the first half of 2012 from around Tk 71 in the previous year.
However, a number of global and local think-tanks and lender agencies have predicted that the GDP growth would decline below 6 per cent in the FY 2013-14 as the investment sector is still going through a stagnant situation. So this big-but-idle reserve come at no service for investment in particular and for the economy at large. Rather the piled up idle dollars indicate lower GDP growth amid reduced business activities in the private sector.
Part of the reason of this stagnation is, although the central bank is increasing the reserve by buying huge volumes of dollar from the scheduled banks to keep the exchange rate stable it is not allowing domestic businesses to borrow foreign currency from overseas. This works as a deterrent to the investment and thus slows growth.
Entrepreneurs did not go for much import of goods and capital machinery due to slower economic activities and a fall in domestic demand due to political uncertainty in the country that resulted in the bigger reserve of the foreign currency.
Our bureaucracy led government will not be able to appreciate the need of stable political situation for encouraging investment in the country. Bureaucracy is about power and not about peace and political stability or economic growth.
