The devaluation of Bangladeshi currency is now the order of the day to retain competitiveness in global market as appreciation of taka against dollar intensifies the crisis of export sector and hurts remitters, suggests experts.
“It is time to think over the depreciation of local currency to adjust price in the global market,” said Bangladesh Bank Former Governor Salehuddin Ahmed.
Bangladesh Bank should give attention to exchange rate following an analysis of advantages and disadvantages of currency devaluation to absorb the shock created by the downturn of currencies in Asia region, he observed.
Salehuddin was speaking as the chief guest at a focus group discussion on “Devaluation of Yuan, Gold and Fuel Price Fall: Impact on Bangladesh.”
Financial Excellence Limited (FinExcel) held the discussion yesterday in the capital.
Criticising the monetary policy, the former governor said the central bank is continuously taking a conservative monetary policy instead of expanding credit growth space.
He views the excess foreign exchange reserve as bad for the country like excess liquidity.
“We should devalue the local currency because exporters are being affected,” said Shamsul Alam, GED member, Planning Commission.
He explained that the currency depreciation will not affect the importers as the import commodities remain in favourable price in global market.
Investment will go to an unproductive sector like gold if taka is not depreciated, suggests the GED member.
The gold price is reduced in international market and it will be more cheap if the local currency becomes stronger against dollar.
Referring the export data he claimed that the devaluation of currencies in Asian region has already affected the export of Bangladesh.
He mentioned that export to India declined by 15.74% in July compared to June followed by Malaysia 23.27%, China 26%, Indonesia 5% and EU Countries 13.38%.
But, Bangladesh experienced higher growth of export in the fiscal year 2014-15 with the competitor countries even amid political turmoil.
Bangladesh’s export growth with India increased by 33.21% in FY2014-15 compared to the previous fiscal.
It was followed by Malaysia 68%, China 48.51% and EU Countries 4%.
The export earnings with Indonesia declined by 25.15% in the last fiscal year.
The Indian currency depreciated 5.3% against dollar since January 2015 followed by Indonesia 12%, South Africa 13% and Malaysia 18%.
Ifty Islam, partner of AT Capital, said the garment sector has a big chunk of business in China and it is being heavily affected due to devaluation of Yuan.
The reduction in oil price in gulf region will affect the remittance coming from there.
He urged the government to take initiative to devalue local currency to protect the garment sector and remitters.
Mamu Rashi, chairman of FinExcel, moderated the programme.
