Although the value of the US dollar has dropped by more than 9% globally over the past month, Bangladesh’s currency, the Taka, has continued to weaken. In fact, compared to other South Asian countries, the Taka has experienced the highest depreciation. This concerning scenario has emerged in a recent report published by Bangladesh Bank.
This is the first time such a special report on the foreign exchange market has been published by the central bank. It reveals that in just the month of June, the Taka depreciated by 3.89%, which is higher than the depreciation of the Indian Rupee and Pakistani Rupee during the same period.
According to Bangladesh Bank, this continued depreciation stems from structural weaknesses in the country’s economy, a shortage of foreign currency reserves, and imbalances between imports and exports.
Bangladesh Falling Behind Its Neighbors
The report states that while the currencies of Bangladesh, India, and Pakistan weakened against the dollar in June, those of Sri Lanka, Nepal, and Bhutan either remained stable or appreciated slightly. This indicates that despite global financial pressures, Bangladesh has been the most financially affected among countries in the region.
A Slight Recovery in July
There is, however, a glimmer of hope. In the current month of July, the Taka has shown signs of improvement, appreciating by 1.86% against the US dollar. This slight recovery is likely the result of central bank intervention in the market or a temporary increase in remittance inflows.
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Economists Express Concern over dollar/Taka
Economists warn that even though the dollar has weakened globally, the continued decline of the Taka reflects a deeper problem Bangladesh’s lack of self-reliance and internal structural weaknesses. Declining export earnings, a sharp fall in foreign exchange reserves, and a lack of transparency in the banking sector have deepened the crisis.
Why Is the Taka Losing Value?
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Falling Reserves: Foreign exchange reserves have dropped below $20 billion.
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Declining Exports: Major sectors, including garments, are experiencing a slowdown.
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Eroding Business Confidence: Reduced investor confidence has increased demand for the dollar.
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Weak Policy Response: The central bank is also being criticized for not taking timely decisions.
What Needs to Be Done Now?
According to economists, Bangladesh must:
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Revive the export sector quickly
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Encourage remittance inflow
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Reduce unnecessary imports
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Ensure good governance in the banking sector
Impact on People’s Lives
The depreciation of the Taka is having its most severe impact on ordinary people. With rising prices of imported goods, the cost of daily essentials in local markets has soared.
Families are also facing increased pressure in loan repayments. As a result, middle-income households are being forced to cut back on daily expenses and tighten their budgets.
