REPORTS published on a leading daily on Thursday said that taka lost exchange rate by around 1 percent against US dollar meaning a slight devaluation in last six workdays for the first time in 10 months. The Central Bank let the slight depreciation to occur without formal announcement of devaluation while commercial banks feel it resulted from payment pressure to clear earlier import bills. Many however believe it is a good sign to encourage exports and discourage imports. The readjustment of the value of taka takes place when the country is largely dependent on imported products such as for textile machinery, raw materials, mobile phones, fuel oils and motor vehicles. The fact is that the reserves at Bangladesh Bank now spill over at US$ 26.23 billion that makes taka stronger. Meanwhile import cost, part of it under fake L/Cs, is outweighing exports and monetary specialists believe a slow down in imports is essential to reduce external payment liability. The lower value of taka against dollar will now mean importers will have to pay more in local currency to discourage imports. On the other hand, as exporters will get more in local currency for export, their produce will be more competitive at lower cost to increase exports. Recipients of remittance will also benefit as they will get more in local currency against the repatriated money by their relatives abroad. Bangladesh’s export earnings declined over 5 percent to $2.61 billion in September from a month earlier. The inflow of remittances also fell by over 19 percent to $1.07 billion in October than in September. So the devaluation is expected to help reign in further decline and bringing improvement in the external sector.But since the cost of imported goods will increase, industrial users and consumers alike will have to pay more now and they can reduce their cost limiting unnecessary import and consumption. Moreover, every devaluation or in situation otherwise with a stronger local currency, the macroeconomic fundamentals go for readjustment. But since Bangladesh economy is at a stable position with lower inflation there is nothing to be much concerned about it while we hope it will bring positive result. Banks now pay Tk 78.15 against dollar from Tk 77.8 a week ago. The selling rate bills of lading stands at Tk 79 from Tk 78.20. Meanwhile dollar sells at Tk 81 in the kerb market showing a distinct rise in price against dollar. Faced by a political impasse and a sense of insecurity, lower flow of foreign investment and slow down in exports, higher import cost will have no doubt depressive impact on productivity. The only alternative to overcome the higher cost of business is by increasing productivity, efficiency and external competitiveness. The spill over of reserves at the Central Bank itself is not much to be praised; its productive use in the economy must get priority without allowing it to make taka stronger.
