Low export growth is aggravating the crisis of foreign currency in the inter-bank foreign exchange market despite decline in import growth and rise in remittance inflow.
Given that the structural shortfall in merchandise exports over imports will take time to correct itself, a central bank report forecast that the recent weakening of the currency would persist well into the financial year 2005-06.
The dollar crisis is acute in the exchange market with greenback selling at Tk 66.15 to Tk 66.20. But it is the scant supply of dollars than its prices that is the real worry. A few banks are selling dollars in very small amount.
The report prepared by the Policy Analysis Unit of Bangladesh Bank (BB) however anticipated that any further weakening of the currency will be both orderly and well-contained within Tk 65 to Tk 67.
The current and prospective performance in the leading export sectors along with the visibly healthy flow of workers' remittances will contain further weakening of the local currency, explains the report.
Again a BB statistics show taka has been devalued by three percent against the dollar prices over the first four months of the current fiscal. BB has hinted at further devaluation of taka in the coming days.
Growth in LC (letter of credit) opening during July-November period has been 4.95 percent compared to the growth in the corresponding period of the previous year. However last year saw 22 percent growth compared to that of its preceding year.
LCs worth $615 million have been opened in the first 15 days of December, while the same period of the last year saw LC opening of $654 million.
Meanwhile, during July-November period remittance inflow rose by 26.18 percent compared to the same period of the previous year. An average of $352 million worth remittance came a month this financial year while the figure was $279 million last year.
A BB source said, remittance worth $199 million flowed in over the first half of December and at the end of the month the figure may well exceed $400 million.
The present dollar crisis may ease a bit due to the remittance growth, but the situation is unlikely to improve substantially as the export growth continues to be scant. The latest available statistics show an export growth of 4.4 percent in the first three months of the current fiscal year.
Although import growth has declined, the volume remains strong with the figure reaching $1,186 million on an average per month in the current fiscal, which was $1,130 million in the last financial year.
