Taka depreciated further by 80 paisa

Bangladesh Bank has devaluated taka again within a span of a week against US dollar, raising the exchange value of dollar by 80 paisa to Tk 87.50 per dollar.

Following the decision, the exporters and remitters will be benefited while import cost will go up.

Sources said the central bank fixed the exchange rate of dollar at Tk 86 by raising 20 paisa in January. The exchange rate was raised by 20 paisa in March, 25 paisa in April. The exchange rate of dollar was raised by 25 paisa and fixed at Tk 86.70 on 9 May.

However, the price of dollar exceeds Tk 90 in the open market. The price of dollar is above Tk 93 in the open market while the importers have to buy a dollar for Tk 95-96 against LC.

Bangladesh Bank is selling dollars continuously, and raising price gradually due to demand of dollars. In this way the central bank is trying to control the market.

Economists, however, are in favour of leaving the price of dollar over the demand and supply.

Prices of food items, raw materials and oil have increased in the international market. The shipping costs have also gone up. As a result the import cost has increased by almost 44 per cent. This is mounting pressure on the foreign exchange reserve. The way the import has increased, the export has not increased in the similar way. On the contrary the remittance has dropped. As a result, the deficit is widening every month. So dollar is being sold from the reserve to meet the import cost.

With current reserve, the import of five and a half months can be met. The reserve will decrease further if the import cost keeps increasing in this way. On the contrary, there is a pressure from the International Monetary Fund to properly maintain the accounts of reserve. In compliance of IMF guideline, export development fund, loan of government project and loan provided to Sri Lanka and deposit to Sonali Bank have to be deducted from the reserve. So the reserve will decrease by over 7 billion dollars. Now the current reserve is 42 billion (4,200 crore) US dollars.

Bankers said the inward remittance was good due to Eid. The way the cost of import has increased that cost could not be met with the export earnings. So volatility is prevailing in the financial market over dollar. There is no sign of this crisis disappearing. This crisis is mounting pressure on the reserves. Simultaneously, the crisis of cash has surfaced. As Bangladesh Bank is collecting taka by selling dollars.