A recent rise in the Taka’s exchange rate is raising concerns that local exports could lose their price advantage in global markets.
According to central bank data, Bangladesh’s Real Effective Exchange Rate (Reer) climbed 1.39% in August to reach 105.37.
The Reer compares the Taka against a basket of 17 major trading partners, adjusted for inflation and trade volume.
Any reading above 100 indicates an overvalued currency.
The pressure on exports stems primarily from a stark inflation gap and currency misalignment.
While major trading partner economies enjoy low inflation rates between 2% and 3%, Bangladesh’s domestic inflation lingers near 9%, automatically driving up local production costs and making goods more expensive.
Compounding the issue, the Taka actually strengthened in August instead of depreciating to offset these high domestic price increases.
By the end of the month, the currency stood at Tk121.61 to the US dollar—roughly Tk1.50 stronger than what Reer-based economic calculations suggest it should be.
An overvalued Taka makes Bangladeshi goods costlier for international buyers.
For an economy heavily reliant on ready-made garment exports and overseas remittances to supply foreign exchange, persistent overvaluation risks weakening manufacturer competitiveness.
Central bank officials indicated that further currency depreciation will likely be necessary to align the taka with actual market conditions.
