Banks Rally behind Foreign Exchange Market Reforms to Prevent Currency Devaluation, 12 DEC
In an effort to stave off possible devaluation of the local currency, the banking sector has made a resounding commitment to back all foreign exchange market reforms. This pledge was announced by the president of the Association of Banks and Financial Entities (Abef) during the closing of the ‘week of the banker’.
Triple-digit Inflation and the Lure of the US Dollar
Argentina’s economy is grappling with the impact of triple-digit inflation, leading to a surge in the appeal of US dollars. This is a direct result of the peso’s significant depreciation. Some have proposed the abandonment of the peso in favor of the US dollar as the official currency, a suggestion that has been met with mixed reception.
Rising Inflation and Exchange Rate Pressure in Bangladesh
The high non-performing loan (NPL) situation in Bangladesh’s banking sector is cause for concern. Measures have been taken by the central bank to address this issue, including amendments to the Bank Company Act, 1991, which have raised economists’ eyebrows. Escalating NPLs pose a threat to the banking sector, risking capital erosion and tarnishing bank reputations. The situation is further exacerbated by inflation and exchange rate pressure.
Non-Performing Loans (NPLs) Weighing on Banks
Humaira Azam, the managing director of Trust Bank Limited, has voiced concerns over the ineffective measures addressing the high growth of NPLs. A variety of factors contribute to the persistence of NPLs, such as non-cooperation from borrowers, fund transfers, challenges in assessing collateral security, and a lenient loan rescheduling policy. Azam highlighted the need for efficient supervision and monitoring of advances from pre-disbursement to recovery, ensuring proper fund utilization.
The Impact of Devaluation on Iraq’s Economy
The Central Bank of Iraq has devalued the national currency against the US dollar by almost 20 percent in response to the financial crisis triggered by low oil prices amid the coronavirus pandemic. This move has sparked public outrage, with concerns that it will exacerbate the economic difficulties faced by Iraqi civilians.
Risks and Implications of Currency Devaluation
The article also discusses the risks and implications of currency devaluation, drawing on examples such as the hyperinflation in Zimbabwe and the US Federal Reserve’s response to the pandemic. The US dollar’s status as the global currency and its influence over global trade and multilateral institutions are highlighted as key factors in the ability of the US to print money and raise the debt ceiling, while developing nations struggle with inflation and debt.
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