AS the uncertainty gripped the entire business exercises, Bangladesh Bank is continuously purchasing US dollars from the local banks for maintaining a stable exchange rate. A national daily on Friday reported that the central bank bought US dollars worth $1.54 billion in the first quarter of this FY taking the total to $19.11 billion in four years. It was thought that after 2014 general elections, the business climate which remained stagnated after the collapse of capital market in 2010 and many financial scams, the gloomy cloud over the economy may disappear and take a positive turn. The investment in private sector has remained slow for half a decade that narrowed the demand of dollars in market needed to pay imports bills. Whatever success the government claims, the truth is that it has failed to restore the business friendly climate and regain confidence among businesses. Such damping environment has ultimately instigated capital flights. Despite taking several mega projects and pretending success in generating electricity the national economy, more so the day to day life of the common people, is burdened with rampant corruption, and a fear free environment, which is vital for carrying economic activities, is yet missing.
The government often claims its success of swelling foreign exchange reserve but the reserve swelled for the lack of investment. The non-performing foreign exchange reserve will not bring any positive result due to the existing slow growth in import amid dull business. Data revealed that the central bank continued to purchase US dollars in Q1 of the current FY16-17 after it had bought US dollars worth $4.13 billion in FY15-16 to keep the exchange rate of taka stable against the US dollar as banks were overflowing with the US banknotes. It may be noted that imports registered 18.42 percent negative growth in July, compared with the 15.96 percent growth in the corresponding period of the previous fiscal. Against this backdrop, most banks are now holding excess US dollars than their own needs or handling power.
The exchange rate of US dollar against taka would have depreciated significantly if the central bank had avoided purchasing the US banknotes. The import of industrial raw materials and capital machinery decreased significantly in the recent months causing the banks to face huge amount of excess US dollars.
Providing artificial respiration to the economy will not hold good for the ill-economy unless making it enliven by ensuring business-friendly climate. Non-partisan bankers suggest that Bangladesh Bank should allow the ‘usual business’ of US dollar as demanded by the market players. They also opined what Bangladesh Bank should do more importantly is to discipline the already untamed banking sector overburdened with loan scams and mismanagement.
