He is optimistic about the macroeconomic health of the country as he hopes that the inflation will not rise further in the near future while interest rates on bank credits, now at a justified level, is unlikely to rise.

"The local currency might depreciate to some extent, but any intervention to hold back the devaluation could distort the market," he told the news agency in an interview at his office.

He said any intervention would give the market a wrong signal that the central bank would come forward if any crisis cropped up due to desperate acts of the market.

"Central bank's intervention increases expectation and does not work if there is any problem in the market fundamentals."

He said a few commercial banks are responsible for desperate acts and hinted that the central bank would examine such cases.

Ahmed, however, indicated that the central bank would intervene only when the market would turn more volatile and pose threat to the economic growth of the country anyway.

He said the value of taka against the US dollar would be stable within a few weeks after necessary adjustments.

Imports witnessed a huge growth in present times. Remittances and exports registered growth as well, but not sufficient to offset the additional pressure of import payments, Ahmed observed.

He hastened to add that increased oil prices in the international market resulted in an additional payment of US$500 million, putting extra pressure on the forex reserves.

The payments in foreign exchange increased due to food import as a consequence of recurring floods, he added.

Replying to a question, he billed the present forex reserve of US$2.8 billion as a small amount, which is much lower in terms of net reserve.

According to the Asian Development Bank figures, the exchange rate experienced increased pressures and exhibited significant volatility mainly due to the rapid growth in imports, coupled with a sharp rise in private-sector credits.

"This resulted in the depreciation of taka by about 5 percent between December 2004 and June 2005," said an ADB publication released here on Sunday.

On inflation, the BB governor said the point-to-point rate went as high as 6.8 percent, particularly 8 percent on food account, due to seasonality. He expected that it would not rise further if other factors of production favoured.

He also viewed that there was no reason for increase in the food prices as the country has enough stock, but the problem lies with the supply point.

About interest rates on bank loans, he said the banking system has, by now, recovered from the liquidity crisis they have been suffering in the recent past, which prompted them to raise the interest rates to some extent.

He, however, spoke of strict central bank monitoring so that the rates do not fly "unusually high" and hamper private-sector credit expansion.

"The commercial banks have not been directed to fix their rates of interest in last 3-4 months. They were determining it on their own judgement," the governor said.