* FY 2014 growth forecast cut to 6.2 pct from 7.2
pct-central bank head
* Central bank has been intervening to slow taka currency's
* Says exports remain competitive despite taka's fall vs
By Serajul Quadir
DHAKA, Oct 3 Bangladesh's central bank has cut
its growth forecast by one percentage point to 6.2 percent for
current fiscal year due to a weaker global environment and
political uncertainty ahead of elections, Governor Atiur Rahman
told Reuters in an interview.
Rahman, said the Bangladesh Bank would remain "firm" in its
policy stance ahead of the polls, which are due by January at
the latest, and would continue to intervene to smooth a rise in
the currency that has been driven by a hefty current account
"Our economy may grow 6.2 percent in fiscal 2014, which is
respectable and quite healthy given the global developing
average," Rahman said in an interview late on Wednesday.
The forecast for the fiscal year that began in July was cut
from a projection of 7.2 percent made in the June budget. The
economy grew 6.0 percent in 2012/13.
Emerging markets around the world have been hit by a
withdrawal of funds by investors ahead of an expected winding
back of some of the U.S. Federal Reserve's monetary stimulus.
The Bangladesh Bank cut rates in February and has since held
its key repo rate at 7.25 percent.
"We will remain firm on our monetary policy stance... which
takes into account the fact that there will be a political
transition," Rahman said.
Bangladesh's violent factional politics and poverty have
obscured an economic performance that has put it among the
fastest-growing economies in Asia on the back of its textiles
industry and remittances from overseas workers.
It was in the international spotlight earlier this year when
more than 1,100 people were killed in a garment factory
NO ALARM BELL
Compared with India, burdened by a large current account
deficit and budget woes, and Pakistan, which relies on support
from the International Monetary Fund, Rahman's problems appear
Bangladesh has a $3 billion current account surplus that has
bolstered the value of its taka currency by about 2.5 percent
against the dollar since July. The central bank has intervened
in the currency market to moderate the pace of the increase.
"We have done it (intervention) for exporters, and the
strength of the taka really originates from its current account
surplus," Rahman said
The 15 percent rise in the value of the taka against the
ailing Indian rupee is more troubling for the export-dependent
economy of about 160 million people.
"We import cotton from India and garment exporters are
getting benefits from that cheap price, but our jute is having a
problem, because we export jute to India, and also some
agro-processing industries," the governor said.
Agro-processing includes products such as fruit juices and
"I don't think there is a need to sound an alarm bell.
Despite the depreciation of Indian rupee... we will remain
competitive in the international market."
Looking further out, Rahman said Bangladesh was well
positioned to win business from companies forced out of China by
rising wages there.
"About $20 billion worth of Chinese exports will be shifted
because of their lack of competitiveness due to wages and
prices," Rahman said.
"We will certainly grab part of that and that will give us
an extra edge."
(Editing by David Chance and John Mair)