Imports reduction: CB hopes for major forex saving

The expected reduction in imports during 2012 following the measures taken by the government earlier this year will significantly reduce pressure on the domestic foreign exchange market, the Central Bank said yesterday following its monthly Monetary Board meeting.

It was reported earlier that the higher taxes imposed on imported motor vehicles could save around US$ 700 million. "The Monetary Board was of the view that the policy measures implemented thus far are sufficient to moderate the expansion of both credit and the trade deficit," the Bank said.

The Bank also noted that pressure on the foreign exchange market could lessen considerably if international oil prices decline. The Brent crude oil price was US dollars 112.41 a barrel on 10 May 2012 compared to US dollars 120 a barrel, on average, in March 2012.

The improvement in the supply of domestic agricultural produce over the last few years has continued to help stabilise domestic consumer prices, it said. With respect to monetary developments, market interest rates have moved up gradually, reflecting the tightening of monetary conditions.

The Bank said it will continue to closely monitor monetary and external sector developments and adopt further measures if necessary in the months ahead.