Taka has gained nearly five per cent against the US dollar over the past six months as import of products except fuel oil fell and foreign remittance rose. The foreign currency reserve touched $10.70 billion mark on Thursday as the 2012-13 fiscal kicked off with a downtrend of opening of import LCs (letter of credit) while around $1.2 billion came in as remittance in July.

The current foreign reserve can meet up import costs for more than four months, officials at the central bank said. The reserve dropped below $10 billion mark around a month ago as the government had to pay import costs to the Asian Clearing Union.

The officials said the local currency in gaining on the greenback thanks to the 'satisfactory' inflow of dollar through remittance.

On Thursday, the value of US dollar in the inter-bank currency market was Tk 81.60 which was Tk 0.10 less than the previous day. The price of dollar had climbed nearly to Tk 85 last January.

The central bank bought nearly $ 500 million from the market to offset its impacts on export income and remittance flow, but failed to arrest the slide of dollar.

Officials say Bangladesh Bank is purchasing dollar out of the fear that expatriates will remit less if the dollar slides.

Bangladesh Bank Governor Atiur Rahman said bumper production over past several seasons meant Bangladesh did not have to import rice.

Moreover, he said, the central bank clamped massive restrictions to discourage import of unnecessary and luxurious products. "The import cost dropped for this reason," Atiur explained.

Economist Zaid Bakht, however, called for caution to see to it that capital machinery imports, needed for setting up industries, did not suffer. According to the central bank's import related information on the first two weeks of July, first month of 2012-13 fiscal, LCs worth nearly $1.158 billion were opened for import.

The amount is 58 per cent less than it was in the same time in the previous year.
The clearance procedure has also reduced by nearly 60 per cent in the first 14 days of July.

The import cost came down significantly by the end of the previous fiscal, according to Bangladesh Bank, as the amount of LCs opened for importing products stood at nearly $36.92 billion which was 4.27 per cent less in 2011-12 fiscal.

In total, $32.94 billion worth of goods were imported during the 11 months (July-May) of the last fiscal year, 7.16
per cent more than the previous year, according to the central bank.

The import bill had inflated by 42.76 per cent in the first 11 months of 2010-11 fiscal.
Expatriates, however, had sent remittances worth $12.85 billion in the past financial year, a 10.26 per cent growth over the previous fiscal while export earnings stood at $24.28 billion with a growth of 5.93 per cent.
The import sector saw increase only in fuel import, greatly reducing import cost in the last fiscal while the amount of LCs for fuel import increased by 47.35 per cent.

The amount of LCs opened for importing rice and wheat decreased by 66.34 per cent in the July-May period of the fiscal gone by.

LCs for capital machinery fell 21.52 per cent, import for industrial raw materials was down six per cent and import of the other goods decreased by 5.26 per cent.

Governor Atiur Rahman said the economy was getting back on its feet: "Economy is getting stable following decrease in import cost.

The key indices are positive, remittance is increasing and revenue collection rate is very good. I hope the reserve will be over $10 billion," he told bdnews24.com.
He also hoped the economy will be in 'even better shape" in the future.

Zaid Bakht, also Research Director at the Bangladesh Institute of Development Studies (BIDS), told bdnews24.com: "The overall decrease in import cost is fine. But if import of capital machinery, needed for setting up industries, is reduced, there will be a negative impact on the economy." "It will impact the industries sector negatively and may not let the government reach its goal of 7.2  per cent GDP in this fiscal year," he warned.

The Daily Independent/Bangladesh/ 4th Aug 2012

Asian markets mostly fell and the euro came back under pressure on Friday after the European Central Bank dashed traders’ hopes for strong policy actions to support troubled eurozone economies. Downbeat earnings reports from two of Japan’s biggest electronics firms also weighed on the Nikkei, with Sharp losing more than a quarter of its value in the morning session.

Tokyo fell 1.13 per cent, or 98.07 points, to 8,555.11, Seoul shed 1.11, or 20.72 points, to 1,848.68, Sydney closed 1.12 per cent, or 48.0 points, lower at 4,221.5 and Hong Kong shed 0.12 per cent, or 24.02 points, to close at 19,666.18.

But Shanghai ended 1.02 per cent higher, adding 21.62 points to 2,132.80, after the country’s securities regulator said it would cut transaction fees on equity trading by 20 per cent from September 1.

Markets were deflated by the ECB’s decision to hold off any concrete moves to support the euro such as bond buying, which many had hoped for after bank chief Mario Draghi said last week it would do whatever was needed to save the euro.

On Thursday he reiterated that the ECB was ready to step into the bond markets—but not just yet.
Draghi insisted the onus was on eurozone governments, saying they must carry out promised reforms and turn to the region’s bailout funds before the ECB could step in.

In the face of growing pressure, the ECB “may undertake outright open market operations of a size adequate to reach its objective”, he said, but added that the details would be worked out “in the coming weeks”.

Whatever the circumstances, Draghi said it was “pointless” to bet against the euro. “It stays. It stays. It stays,” he insisted.

However investors, who had sent global markets surging over the past week as they factored in some sort of action, were unimpressed and Spanish borrowing costs bounced back above the seven per cent danger level.

“As we had feared, Draghi failed miserably to live up to the heightened market expectations of significant new measures to match his pledge last week to do whatever is necessary to preserve the euro,” Daiwa Capital Markets said in a note, according to Dow Jones Newswires.

The let-down came after the US Federal Reserve had said on Wednesday that it would take a wait-and-see approach before unveiling any stimulus for the world’s number one economy.

The news rippled around global markets, with London, Paris and Frankfurt all falling, while Madrid and Milan slumped.

On Wall Street the Dow fell 0.71 per cent, the Nasdaq lost 0.36 per cent and the S&P 500 dropped 0.74 per cent.

In foreign exchange trade the euro, which tumbled after the ECB announcement, remained under pressure in Tokyo as investors moved out of riskier assets and into safer bets such as the yen and dollar. The common unit bought $1.2235 and 95.70 yen in late afternoon trade, compared with $1.2178 and 95.26 yen in New York late Thursday.

It was still down from the $1.2250 and 96.12 earlier in Asia before the ECB meeting.
The dollar was at 78.21 yen from 78.22 yen.

The Daily Independent/Bangladesh/ 4th Aug 2012

Standard Chartered Bank Bangladesh on Thursday announced Islamic Banking offerings for its Wholesale Banking clients under Saadiq Branding. This will further strengthen its Wholesale Banking client value propositions, says a press release. This latest strategy is underpinned by the market demand and banks commitment to grow in the market and reinforce its brand promise of ‘Here for good’.

The launching of Saadiq for wholesale banking clients was inaugurated by Afaq Khan, chief executive officer- Islamic Banking of Standard Chartered and Abrar Anwar, managing director and head of origination and client coverage of Standard Chartered Bangladesh. During the launch Abrar Anwar said, “Launching Saadiq for Wholesale Banking Clients is the testimony to that. At Standard Chartered, we believe we are here for progress, and through efforts like this, we want to show that we are here for good.”

There is an accelerated demand of Islamic Banking products in the market. To meet the client requirements of this segment, Standard Chartered Bank had started its Islamic Banking operation in Bangladesh in 2004 with consumer banking products under the Bank’s group branding Saadiq. Now the bank would like to span its offerings to meet requirements of the corporate clientele. Standard Chartered is extremely delighted to bring the Islamic Banking propositions to the market for its valued corporate clients.

The product propositions entail the core comprehensive suite of cash management, financing, trade and related finance products required for corporate houses to fulfil their banking requirements in Shariah compliant way.

To launch the products the bank’s paramount focus is to ensure the Shariah governance as per guidance provided by the Group Shariah Supervisory Committee and Bangladesh Bank, at the same time to bring in state of the art solutions with huge investment in infrastructure, technology and resources.

The Daily Independent/Bangladesh/ 4th Aug 2012

 The 59th Foundation Training Course for Management Trainees of Prime Bank Limited (PBL) concluded recently.

The training course was held at the HR Training and Development Centre of the Bank in Dhaka recently, said a press release.

Kanti Kumar Saha, Deputy Managing Director and Md. Iftekhar Hossain, SVP and Head of HR of the Bank were present as chief guest and special guest respectively.

Md. Fakhrul Islam, SVP and Head of HR-TDC coordinated the training programme.

The Daily Sun/Bangladesh/ 4th Aug 2012

MOSCOW: The International Monetary Fund urged Russia yesterday to adopt a leaner budget and raise interest rates to cool brisk demand and keep inflation from undermining one of Europe’s top economic performers.

The guidance came amid signs that prices were starting to take off in the second half of the year thanks to a spike in tariffs that the government had kept in check until President Vladimir Putin’s May swearing in to a third term.

Fund directors completed their annual visit with Russia— its bank lending healthy and sovereign debt at just nine percent of GDP—showing remarkable resilience to a global economic slowdown driven by the eurozone debt crisis.

The IMF praised the strength of Russia’s recovery from the 2008-2009 global financial crisis and complimented the central bank on introducing broader exchange rate flexibility that has helped establish more natural market rates.

The Daily Sun/Bangladesh/ 4th Aug 2012