Central bank governor Abdur Rouf Talukder said that the emergence of the Russia-Ukraine war and induced geopolitical tension led to a severe stress on the external sector of emerging markets and developing economies, including Bangladesh, largely due to a rise in energy price and supply chain disruptions.
Average inflation saw a rise during the quarter review, with a minor decline in foreign exchange reserves and depreciation of local currency against the US dollar, he was quoted as saying by Bangladeshi media reports.
Bangladesh’s economy is facing pressure due to a rise in inflation and a fall in export amid geopolitical tension and supply chain disruption, the ‘Financial Stability Assessment Report’ for July-September 2022 by the Bangladesh Bank said. Credit risk is the major risk factor for the banking sector in terms of its impact on the banks’ capital adequacy.
The governor said due diligence needs to be ensured in foreign trade transactions so that proper values get reflected in export and import letters of credit.
Banks and financial institutions need to remain vigilant in ensuring asset quality as well as maintaining adequate capital and liquidity to address any adverse shock, he said.
Deputy governor Abu Farah Mohammad Nasser said that the domestic economy might face some pressures due to a rise in inflation and a decline in exports.
Despite the trade deficit narrowing in the July-September 2022 quarter, the fall in inward remittance had an impact on foreign exchange reserves, he said.
The bank has taken congenial measures on rescheduling of loans and advances to maintain the momentum in overall economic activities, enhance stability of the financial sector and ensure proper management of classified loans, he added.
Fibre2Fashion News Desk (DS)
