Dhaka, Bangladesh (BBN) – The central bank of Bangladesh is going to conduct a study on exchange rate policy options for Bangladesh in the backdrop of the global financial crisis, officials said.
Under the study, the Bangladesh Bank (BB), the country’s central bank, will examine the real position of the Bangladesh Taka (BDT) against the US dollar considering the recent fallouts from the international financial crisis.
“We’ve planned to conduct an in-depth study on exchange rate policy options to cope with the international financial meltdown’s impact on Bangladesh economy,” a BB senior official told BBN in Dhaka.
He also said the central bank’s Policy Analysis Unit (PAU) will conduct the study considering the movements of currencies of competitor countries like India, Pakistan and Vietnam.
“….any large depreciation of Bangladesh Taka (BDT) is not likely to increase Bangladesh’s exports appreciably in the present global situation,” the PAU said in a study report.
The policy paper on Navigating the Global Financial Storm: Challenges for Bangladesh also said the present circumstances and the current state of macroeconomic fundamentals do not provide enough justification of pursuing any policy of letting the exchange rate depreciate to a significant extent.
On the other hand, it might adversely affect the country’s gradually improving domestic growth prospects through raising import cost of capital goods and other essentials, the study noted.
During the last July-September period, the nominal effective exchange rate (NEER) depreciated marginally while the real effective exchange rate (REER) index appreciated.
The REER-based exchange rate shows that Taka remained undervalued by around 10 per cent during September last against major trading partners.
According to the data, although the REER-based exchange rate rose in September last, the NEER is still higher than the REER-based exchange rate indicating that Bangladesh enjoys some export competitiveness.
BBN/SI/SS/AD-24November08-8:50 PM (BST)