Bangladesh Bank is closely monitoring the mechanism of various multinational companies, institutions and individuals to remit foreign currency from the country to detect irregularities, if any.

Bangladesh Bank governor Dr Salehuddin Ahmed told this at a discussion on "Floating Exchange Rate: How Does It Work for Bangladesh," organised by Economic Reporters Forum (ERF) at the National Press Club in the city yesterday.

Deputy Governor of the central bank Allah Malik Kazemi, Deputy Managing Director of Sonali Bank M Amanullah, Country Treasurer of City Bank Bashar M Tareq, President of Metropolitan Chamber of Commerce and Industries (MCCI) Kutub Uddin Ahmed, Economist Dr Ananya Raihan and ERF general secretary Nazmul Ahsan, among others, took part in the discussion moderated by ERF President Zakaria Kazal.

Some of the discussants, mainly the reporters, in the meeting pointed out that some multinational companies, particularly cell phone operators were repatriate large volumes of earnings from Bangladesh while borrowing from the local banks. Some importers were also siphoning dollar from the country causing a crisis here.

The Bangladesh Bank governor said that the central bank is closely monitoring it and steps will be taken accordingly if any irregularity is detected.

He said that remittance of money abroad might have exacerbated the pressure on the foreign exchange market which was still under pressure due to rising import bills.

"Though the scope for intervention is limited under a floating exchange rate regime, the central bank may intervene in case of emergency to contain volatility in money market and avoid inflationary pressure," he said.

We need to maintain dollar reserve at a satisfactory level to pay for imports of goods and services, besides making payments for the incrementally rising oil import bills.

"Without developing the real and productive sectors, increased export-import is not enough to contain the rising inflationary trend," the governor said.

Stressing equitable growth in development, Mr Salehuddin advised the business community not to look at profitability only but to invest in poor-friendly projects so that more employment is generated.

"Market fundamentals for monetary management are okay but fiscal measures and other conditions should be adjusted to maintain stability in the money market," said the Governor.

He said, "The rise in dollar prices has been helping the economy to boost export."

"Export in the first six months of the current fiscal year has gone up by 16.9 per cent, remittance earnings have increased by 22.8 per cent in pace with the increase in the price of dollar," Dr Salehuddin said.

"The floating exchange rate will work more effectively in the coming days as our experiences are being enriched. Money market will be richer with the continuous expansion of the economy. The initial volatility in currency market will be removed and inflation rate will also be more tolerable in the days ahead," the governor hopped.

Allah Malik Kazemi said floating exchange rate is a standard practice and not a prescription of the International Monetary Fund (IMF).

MCCI president Kutub Uddin Ahmed in his deliberation criticised the central bank’s tendency to contain high foreign exchange reserve while the currency market remains volatile.

"Industrial growth is being hampered due to unusual dollar price, which is resulting in higher production cost. Interest rate of lending is also increasing. Suffering of the people’s is mounting as prices of essential commodities are going up due to depreciation of Taka," Kutub Uddin said.