At a time when the apparel industry is recovering from the Covid-19 pandemic with robust export growth, favorable exchange rate of US dollars against Bangladeshi currency gave a little boost to its earnings.
According Bangladesh Bank (BB) data, the interbank exchange rate was Tk 86.7 per dollar on Thursday. In January, it was Tk85.
To be competitive in the global export markets, it was the long-standing demand of the exporters to devalue the Taka as its competitors were enjoying extra benefits due to the depreciation of their currencies.
As of May 10, the Indian currency Rupee dropped by 51 paise to an all-time low of Rs 77.41 against the US dollar.
On the other hand, the Pakistani currency hit a new all-time low of Rs190 against the US dollar in intra-day trade in the interbank market on May 11.
“If we take the previous rate into consideration, the present exchange rate is favoring the exporters as they are getting a little bit higher,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Shahidullah Azim told the Textile Today.
But our competitors are becoming stronger as their currencies depreciated more than that of us. As a result, we are losing to grab work orders to some extent as they can offer fewer prices taking the benefits of devaluation of their currencies, said the business leader.
I would better say it gave a cushion to exporters when they are fighting against soaring raw materials prices, said Azim.
However, the exporters are not getting the full-fledged benefits of devaluation of Bangladesh currency against the USD as the bankers are charging higher for imports of raw materials, sector people claimed.
“Exchange rate is not favoring exporters; rather the banks are taking advantage of the devaluation of Taka against US dollar,” Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) executive president Mohammad Hatem told the Textile Today.
We are getting Tk85.5 against $1, while during import payment banks are charging Tk95 for each US dollar, said the business leader.
Exporters are suffering as the import costs of raw materials went up as banks are charging more than the bank rate. That is why we are not getting benefits of appreciation of the US dollar against the Taka, he explained.
Talking about the current exchange rate, noted economist and former advisor to caretaker government AB Mirza Azizul Islam said it is favorable for exporters but the government should carefully manage it so that the competitiveness of the exporters remains and they can beat others in the global market.
For the betterment of exporters, the sector people demanded Bangladesh Bank’s intervention to stop charging extra rates than the central bank rate.
“With the current exchange rate, exporters are feeling a little comfort but the banks are charging higher, which needs to address,” Bangladesh Garment Manufacturers and Exporters Association President Faruque Hassan said.
He also said that currency should be devalued further against the dollar to compensate for the rising cost of production mainly because of raw material price hikes and freight costs.