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Need of relaxation of controls on foreign exchange expressed

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November 6, 2000 

Dhaka (UNB) – Finance experts sought relaxation of control on foreign exchange by building institutional capacity to cope with the consequences of the deregulation.

The capacity of the central bank and commercial banks should improve with modern management-information systems, they said while addressing a seminar on “Relaxation of Controls on Foreign Exchange” here today (Sunday).

Dhaka Chamber of Commerce and Industry (DCCI) organised the seminar at its auditorium. DCCI consultant Syed Ashraf presented the keynote paper with the president Aftab ul Islam in the chair.

Centre for Policy Dialogue (CPD) executive director Dr Debapriya Bhattacharya, Bangladesh Money Changers’ Association president Mohammad Kafayet Ullah Masud, Standard Chartered Bank head of corporate banking Mamunur Rashid were among the discussants.

Dr Debapriya said there are adequate resources of foreign exchange earnings, but those were not being invested in the country, resulting in appreciation of the Taka against the US dollar compared to other South Asian currencies.

Over last few years, he observed, the import growth has been lower than the export growth as the forex resources could not be utilised to add to the GDP.

He said the forex resources would be around USD 5.5 billion in terms of real export earnings, remittances and foreign aid.

The currencies of Indonesia, Taiwan, Thailand and the Philippines were adjusted downward by 2 per cent, 2.8 per cent, 4 per cent and over 8 per cent respectively in last six months meant for growing crisis in the region, he said.

He also said investment did not take place in the country due to poor infrastructure facilities and a monetary policy with high interest rate.

Dr Debapriya said new pressures on the Balance of Payments (BOP) were emerging for the country needing to pay about USD 500 million annually to the international oil companies within next few years, the investment-recovery period.

In his keynote Ashraf recommended that the exchange rate of Bangladesh currency may either be revised to reflect its intrinsic worth or the currency may be flouted.

He also recommended liberalisation of export-import business and allowing authorised banks to approve remittance of all export claims.