Special Correspondent :
The sharp devaluation of local currency against the US dollar has sent shockwaves through the financial system stoking fear of grave economic consequences.
Financial analysts attributed the balance of payment pressure to be the main cause of sinking value of local currency.
“To get an US dollar, we have to pay Tk 83,” said a banker on Friday, adding the dollar is gaining ground against the local currency because the demand is high.
He said, high import has tightened the supply of dollar in the market raising the demands. “We are struggling to meet import payment obligations due to the supply shortage.”
Bangladesh’s overall import (C&F) rose by 26.22 per cent to US$ 38.71 billion during July-February period of this fiscal, while import grew by -2.62 per cent to US$ 30.67 billion during the corresponding period of last fiscal, according to Bangladesh Bank (BB).
The rate of dollar in the inter-bank exchange market was Tk 82.98 on Thursday. It was Tk 80.03 during the corresponding period
of last year, showed a BB data.
Bangladeshi taka maintained a stable position against the greenback in last five years. The average exchange rate of dollar during this period was around Tk 78 to Tk 80.
The rate of dollar in the inter-bank exchange market was Tk 83.16 in February of 2012.
“The devaluation of local currency against dollar was a clear sign of economic imbalances. It was mainly due to the large current account deficit,” Economist Dr Zahid Hussain told The New Nation.
He observed the local currency sinking at a time when most Asian currencies are gaining ground against the greenback. “The central bank has been unable to cool down the situation creating a major problem for the economy and a risk to investors. It also sends shockwaves to the financial market,” he said.
“A stable currency is attached with economic performance and investors confidence. So, the devaluation will negatively affect economic performance and erode investors’ confidence,” he noted.
“Ultimately the situation is damaging,” said economist Dr Ahsan H Mansur.
He said high import puts tangible pressure on the local currency, which fell sharply against the dollar. Export earnings and remittances have not kept pace with imports and this has resulted in a shortage of dollars and consequently sending the value of taka to record low.
“The devaluation did not come as a surprise given the balance of payment pressure on the foreign exchange market,” he added.
He said the currency devaluation raises the concern over a further rise in prices of commodities and consumer products and grow public discontent. The currency fluctuations will also push inflation rates up.
“If the central bank fails to bring back the stability in the exchange rate in the coming weeks, it will surely destabilize the economy,” he warned.
In order to bring some respite, Bangladesh Bank has so far sold US$ 2.0 billion to commercial banks.
The sharp devaluation of local currency against the US dollar has sent shockwaves through the financial system stoking fear of grave economic consequences.
Financial analysts attributed the balance of payment pressure to be the main cause of sinking value of local currency.
“To get an US dollar, we have to pay Tk 83,” said a banker on Friday, adding the dollar is gaining ground against the local currency because the demand is high.
He said, high import has tightened the supply of dollar in the market raising the demands. “We are struggling to meet import payment obligations due to the supply shortage.”
Bangladesh’s overall import (C&F) rose by 26.22 per cent to US$ 38.71 billion during July-February period of this fiscal, while import grew by -2.62 per cent to US$ 30.67 billion during the corresponding period of last fiscal, according to Bangladesh Bank (BB).
The rate of dollar in the inter-bank exchange market was Tk 82.98 on Thursday. It was Tk 80.03 during the corresponding period
of last year, showed a BB data.
Bangladeshi taka maintained a stable position against the greenback in last five years. The average exchange rate of dollar during this period was around Tk 78 to Tk 80.
The rate of dollar in the inter-bank exchange market was Tk 83.16 in February of 2012.
“The devaluation of local currency against dollar was a clear sign of economic imbalances. It was mainly due to the large current account deficit,” Economist Dr Zahid Hussain told The New Nation.
He observed the local currency sinking at a time when most Asian currencies are gaining ground against the greenback. “The central bank has been unable to cool down the situation creating a major problem for the economy and a risk to investors. It also sends shockwaves to the financial market,” he said.
“A stable currency is attached with economic performance and investors confidence. So, the devaluation will negatively affect economic performance and erode investors’ confidence,” he noted.
“Ultimately the situation is damaging,” said economist Dr Ahsan H Mansur.
He said high import puts tangible pressure on the local currency, which fell sharply against the dollar. Export earnings and remittances have not kept pace with imports and this has resulted in a shortage of dollars and consequently sending the value of taka to record low.
“The devaluation did not come as a surprise given the balance of payment pressure on the foreign exchange market,” he added.
He said the currency devaluation raises the concern over a further rise in prices of commodities and consumer products and grow public discontent. The currency fluctuations will also push inflation rates up.
“If the central bank fails to bring back the stability in the exchange rate in the coming weeks, it will surely destabilize the economy,” he warned.
In order to bring some respite, Bangladesh Bank has so far sold US$ 2.0 billion to commercial banks.
