by IANS |
Dhaka, Jan 13 (IANS) With the exchange rate of the taka depreciating 25 per cent in the last 13 years against the US dollar, and falling to an unprecedented 86 takas against the dollar at the start of the week, Bangladesh's central bank is looking to adopt a policy of devaluation to boost exports and remittances.
Bangladesh Bank has indirect control of the currency's value through its buying and selling of dollars, in what is called a 'managed float'.
Devaluation can boost a country's exports by making its products more competitive in international trade.
As the country has adequate forex reserves of over $44 billion, Bangladesh Bank (BB) officials suggest people not be worried by the taka's depreciation, although they may have to bear the brunt of higher prices due to the impact.
Bangladesh trades internationally by the US dollar. Despite adopting a 'conservative policy', the value of taka has decreased by about 25 percent against that dollar in the last 13 years.
In other words, while a consumer would need 100 takas to buy a product or service from the international market 13 years ago, now it costs 125 takas to buy the same product, shows the data of Bangladesh Bank.
The value of taka has fallen more in the private transaction of the US dollar during this period.
In February 2009, it took 69 takas to buy a US dollar, as against 86 takas now.
In the last five months, the Bangladeshi currency has lost its value by 1.41 percent against the US dollar.
The taka was devalued once again by 20 poisa on the inter-bank exchange market on Sunday against the dollar. Despite holding a stable position for a month and a half, the depreciation occurred on Sunday.
On Thursday, the last day of last week, one had to spend 85.80 takas per dollar in the interbank currency market, and it took 86 takas on Sunday, a Bangladesh Bank official told IANS.
State-owned Sonali Bank and Janata Bank sold dollars at 90.50 takas on Sunday, and Agrani Bank has sold at 90.30 takas, but outside the Bank, dollars are being sold in the open market for 91.50 takas, sellers told IANS on Wednesday.
Earlier, the central bank purchased $8 billion from different banks in fiscal 2020-21 to maintain the exchange rate of taka, when import orders decreased severely for worsening pandemic. The central bank, however, supplied $ 2.50 billion so far in the current fiscal year as the import demand increased by 50 per cent after the pandemic situation saw some improvement.
The central bank sometimes relaxes policy to increase the dollar exchange rate so that the expatriates and exporters could send more forex income to the country.
The exchange rate of the US dollar against the Bangladeshi taka has been fixed by the government since independence.
The taka was declared convertible (exchangeable) for enhancing foreign trade on March 24, 1994. And in 2003, this exchange rate was made floating. From then on, the national currency is no longer devalued or revalued by declarations.
However, although the exchange rate was floating, it was not entirely market-based.