Plans to procure more, says BB governor
Bangladesh is going to boost its official reserve of gold, buying 10 tonnes of bullion worth about $400 million from the Internatio-nal Monetary Fund.
A decision in this regard was taken as part of Bangladesh Bank’s plans to diversify its reserve, said the BB governor, Atiur Rahman.
The governor told New Age on Monday that the fluctuation of US dollar against major international currencies posed a challenge to the country’s foreign currency reserve, now hovering around $10 billion plus over the last one year.
He said formalities on the purchase of gold have been done.
The central bank also plans to procure more gold which would work as a ‘hedge’ against inflation, Atiur added.
Finance minister AMA Muhith observed that BB required to increase its gold reserve as the amount of gold it holds is not sufficient.
The finance minister said the country’s South Asian neighbours have already raised their holding of gold over the years while Bangladesh last time bought gold as early as in 1975.
With this latest purchase the amount of gold in BB reserve would be 13.5 tonnes, still the lowest among the major South Asian countries.
The holding of gold is highest in Sri Lank, about 22 per cent, Pakistan more than 8 per cent, India 7.5 per cent and Bangladesh only 5.5 per cent of their overall reserves.
Analysts said the BB plan to augment its gold reserve appeared to be the start of a significant shift away from holding the US dollar.
Countries like India and Sri Lanka in South Asia have already augmented their gold reserves late last year in view of the weakening dollar against other international currencies.
Since the global financial recession, the greenback lost its value against Yen, Euro and Pound. It has, however, shown some appreciation with the recovery from the global economic crisis.
But international currency managers were not so upbeat about the future of the US dollar, according some analysts.
‘We see gold as an important anchor and a hedge for protection in times of volatile currency markets,’ Sri Lankan central bank governor, Nivard Cabraal, told AFP last November after the Island nation purchased about 15 tonnes of gold in two instalments.
India purchased 200 tonnes of gold in last November for $ 6.7 billion from the IMF which decided to sell out some 403.3 tonnes of gold to raise funds for its member countries. China and Germany have also plans to augment their gold reserves.
Bangladesh’s purchase is, however, very small, accounting for just 0.3 per cent of last year’s global bullion demand of about 4,000 tonnes.
But Edel Tully, precious metal strategist at UBS in London, said that while the purchase was not huge, ‘it once again highlights that official institutions in the East are adding to their gold reserves.’
Former finance secretary Akbar Ali Khan pointed out that popularity of gold as reserve was increasing across the world because of volatility in the currency market against steep rise in the price of gold.
The price of gold has been steadily increasing for the last ten years with occasional ups and downs.
The price of the precious metal, however, hit an all time high at $1,243 an ounce in last May. It rose further to $ 1,258 an ounce in last June before slipping to $1,226 an ounce in the current month.
Economic adviser to the Prime Minister, Mashuir Rahman, observed that the country’s debt service liability was increasing because of appreciation of Japanese Yen against the US dollar.
He pointed out that the county had to pay higher amount of money to the lenders because of falling value of the greenback.
