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Who is to blame for dollar crisis?
Qazi Azad

          THERE must be something terribly wrong somewhere on the economic front. Do the top brasses of the ministry of finance think in the same way about the relentless dramatic depreciation of our national currency? Can the big bosses of the Bangladesh Bank (BB) any more sleep peacefully while Taka has continued to lose its vitality like a vanquished soldier being starved to eventually die out? Taka lost 54 paisa from its value against dollar last week and 34 on a single day on February 16 with the price of dollar having reached Taka 70.15 for import.
Anxiety has indeed begun to grip the bewildered citizens at the persisting plunge of the local currency. Unless its fast fall has been halted through some additional monetary measures, inflation will continue to receive upward strokes to record a dismal average at the year-end defying all forecasts. It is no time to give respite to our nerve drawing some satisfaction from the relatively low prices of vegetables and onion. This is the major growing and the harvesting season of these crops when their supply remains usually abundant. Let the summer come and then yield place to the rains -- the period of the year when the growers' onion stock begins to exhaust and vegetables become rare in the fields -- there will be hardly any room to draw some comfort from the low prices of these essentials. Prices of most products will then rather zoom to keep pace with the ones imported on payment in strong dollars through conversion of the weak local currency. It will inevitably make the market unbearably hot to drive the people crazy.
A massive shortfall in the supply of dollar is said to be causing our currency to dwindle ceaselessly in value. The central bank has reportedly blamed an unprofessionally poor asset-liability management by some new generation private banks alongside price-hike of oil and other commodities in the world market for the awesome trend of continued depreciation of the local currency. A big supply-demand gap resulting from the opening of too many letters of credit for import by these banks without regard either for their foreign currency holding or their earning and the trend of foreign currency supply in the intra-bank market has created the dollar scarcity. The banks concerned have reportedly argued that the BB's statement is politically inspired and that its halt of injecting foreign currency in the market is to blame for the unease. My good Lord, they find politics in business. Could that be so as business is now increasingly getting involved in politics?
You may recall former Russian President Boris Yeltsin's experiment with free market economy without having effective regulatory networks duly established saw the country's economy gone off the track. It caused so much suffering to the people that the western media once reported that many Russian girls left their country to join professions that they would have otherwise avoided. Some of them knocked off even prostitutes in West Europe and belly dancers in several Asian countries from their jobs. Yeltsin's disconcerted honeymoon with the free economy also made some Russians rich by world standard. They took the advantage of the lacunae of the market arrangement to literally mint money and grew super rich at the expense of the country and its people.
The ruling mercurial oil prices in the world market hinted at the gathering storm on the economic front from long since. What did the BB do to caution the banks in advance against making untenable expenditure commitments in foreign exchange without being sure of funds at this hard time? Had they been only tallying the trade and other financial data to conjure up for them a picture of happy economic prospect without keeping a vigilant watch on the global political front? Could the private banks concerned appreciate that free market also presupposes that the actors in the market will conduct their business ethically and with prudence to avoid hurting both clients and the country? The blame-game for the acute dollar crisis must end on identifying who is actually to blame for taking the country to this dire straits.
The 1996 stock exchange debacle still remains broadly unaccounted for whereas it gave such a terrible shock to stock market that most of the small money holders are still hesitant about buying shares. They can't be yet sure whether in buying shares they actually purchase bankruptcy with their savings, accumulated through hard toil. A credit and investment bank went red not very long ago after having illegally lured many people with high interest rate to keep their savings in fixed deposit with it. Our stroll towards free market economy must not be rocky due either to laxity in discharging the regulatory functions or insincerity in performing as responsible market actors. We should watch whether the gradual depreciation is being followed by a steady decline in import, as postulated by normal economic rule. If not, shouldn't one check whether the aggravating uncertainty, fuelled by the possibility of intensification of the present confrontational politics with the elections coming nearer has stimulated capital flight? Pre-shipment inspectors do not usually check the market to verify the genuineness of the price of any goods quoted by its exporter in the invoice. If the source or sources of procurement of the imports for which the controversial letters of credit have been opened are countries where fraudulent dealings by some exporters are not a rarity, one has reasons to raise eyebrows.
The depreciation of our currency is making our exports progressively cheap abroad and should lead to increased export. The Export Promotion Bureau has dilated their relevant fingers to pose a victory sign and reported a 15 per cent increase in export in the first six months of the current fiscal year. But how good is good? Cheaper export from a pre-dominantly import-dependent country also means that the working hands producing the export items are being lashed and economically squeezed relentlessly by a rising inflation. What about the so-called level playing field for the workers and their welfare, pleaded by the market internationalists in this uneven world?
The pertinent authorities in the country must know that the hundred- dollar notes in the secondary currency market at Dhaka always changed hands at an exchange rate higher than that for fifty-dollar notes. The lesser the value of the notes the lower the exchange rate in terms of Taka and it has been the enduring rule of the game. Unless one is ready to pay a premium rate for the advantage of carrying such notes without drawing the attention of those whose job it is to keep watch for checking capital flight, what could be the earthly compulsion for buying such notes at exorbitant rates, much higher than that offered by banks? If we check whether black cats are stealing the roasts from the dark room after putting the light on, we may get a horrible answer.
The authorities should assume that the oil prices will not take a long time to reach near hundred dollar a barrel. The super-power of this century is about to lock its horns with that of Cyrus the Great. One country is a visible super-power and the other is a super-power in veins. Blood speaks. That could the reason why royals and aristocrats look for blue blood for yoking their children with Cupid's knot and Her Majesty Queen Elizabeth Rezina of the Great Britain is wedded to Prince Phillip from the Republic of Greece. Iran may not yield to the western pressure for abandoning uranium enrichment. If the current war of words between the US and Iran precipitates a major crisis, it will whip up the oil prices to upset national budgets in meeting skyrocketing oil and other import bills. In 1973 when the oil prices went up after an Arab-Israeli war driving other commodity prices upward, the west blamed Libya's Muammar Qaddafi for setting it on( read the Newsweek of the time). Who should we blame this time for our current predicaments and impending graver woes? As things stand now, we must be prepared for a rough ride through a bad time. We should begin to tighten our belt by fixing the responsibility for the current dollar crisis. It's no time to pass on the buck. " The boat is wavering, the water is swelling, captain beware".


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