London: Bangladesh will delay launching a debut international dollar bond until after the country's upcoming elections, its central bank governor said on Friday.

The south Asian country is one of many frontier economies which have issued or planned international debt in the past couple of years, to capitalise on investors' search for higher-yielding assets.

"We have advised the government to take all preparations but not to go for it right now, particularly in a year when there are elections - the government has heeded our words," Atiur Rahman told Reuters in an exclusive interview on the sidelines of a speech.

"If we can have a peaceful transition of power...the bond will be much more attractive."

Bangladesh should issue a relatively small bond totalling around $500 million, Rahman added, to test investor appetite.

Recent hints by the U.S. Federal Reserve's that it will soon end its bond-buying stimulus programme have, however, prompted a broad sell-off of emerging market assets.

Bangladesh is to elect a new government by next January and Prime Minister Sheikh Hasina needs to keep the economy growing to offset rising anger at poor working conditions in the garment sector.

Clashes between anti-government and Islamist activists and police have also claimed dozens of lives this year.

Exports in the 10 months to April increased 10 percent over the same period the previous year, however, on the back of clothing sales.

Bangladesh's taka currency is trading around its highest since Dec 2011 against the dollar, helped by strong export and remittance levels.

Rahman said the central bank spent less than $70 million last month to prevent the currency from appreciating further.

"We are allowing market forces to operate, we are ready to intervene to make the currency stable if needed."

But industrial accidents, such as the April 24 collapse of a garment factory complex where at least 1,132 people died, have raised serious questions about worker safety and low wages in the garment sector, which accounts for 80 percent of the country's exports.

Rahman said the central bank was playing a key role in supporting the garment sector, and had advised the banks not to lend to factories which do not meet health and safety standards.

"We have asked all the banks not to put in a penny if the companies are not compliant."

Rahman said in his speech that governance weaknesses such as those which led to industrial accidents were a risk to Bangladesh's growth.

GDP growth was about 6 percent in the current financial year which ends on June 30, the lowest since 2009/10. The 2013/14 budget aims to bolster economic growth to 7.2 percent.

Ends/AMA/21/06/13