Bangladesh may devalue its currencyFebruary 2nd, 2009 - 12:27 pm ICT by IANS
Dhaka, Feb 2 (IANS) Bangladesh may devalue its currency to match the fluctuating exchange rate against the US dollar and boost its exports, finance minister has said. Finance Minister A.M.A. Muhith Sunday expressed fears that it might not be possible to keep the exchange rate of its currency, taka, against the US dollar at the current level due to the sharp devaluation of the currencies of major trading partners.
“We want to keep the value of taka (at the current level). But, I think, it may not be possible any longer,” he told the media, United News of Bangladesh (UNB) reported.
The exchange rate of currencies in the free-float market cannot be controlled, but the Bangladesh Bank sometimes uses measures available with it to adjust the prices.
Replying to a question, the finance minister said he would not go for any decision in this regard at the moment but would convene a meeting with the stakeholders soon. It may be in the next 15-20 days.
Business leaders, particularly the exporters, have been demanding devaluation of the local currency, claiming that they were losing out while competing in the export markets amid sharp devaluation of currencies in the major competitor countries driven by global recession.
“We’ll have to consider how the currencies of the trading partners are behaving,” said Muhith, who had been the finance minister in the 1980s.
The Bangladesh Bank had adopted a cautious course regarding the exchange rate at the beginning of the global financial turmoil considering that the devaluation of taka would give an extra push to the price situation as the inflation rose as high as 11 percent early last year.
However, the prices of imported commodities have come down by around 40-50 percent while price of fuel oil dropped from its peak of $147 per barrel to $47 now, New Age newspaper said.
A fund manager told UNB on condition of anonymity that the currencies of South Asian neighbours like India, Pakistan and Sri Lanka depreciated heavily due to withdrawal of investment by the western economies from those countries. On the other hand, Bangladesh’s exposure to foreign investment has been very little.
Available figures show that the inter-bank exchange rate of taka against the greenback remained stable for last two years, but in the last 2-3 months the taka appreciated by Tk 0.35 per dollar to Tk 68.90 as of Sunday.
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