'In every crisis lies an opportunity'.
The latest crisis centring the downgrade of the US credit rating, which is supposed to weaken the greenback against other currencies, will benefit Bangladeshi exporters with an edge over their competitors, said analysts.
Bangladesh's competitors in apparel exports, including China, India and Vietnam, are speculating that the dollar would fall considerably against their respective currencies, which would reduce their exporters' competitiveness.
If an Indian exporter now gets Rs 45.33 (Thursday) against a US dollar, he may get Rs 43 after the impact. Similarly, the Chinese exporters may get less from the present 6.39 Yuan against a US dollar. But in Bangladesh the dollar has been gaining against the taka for the past several months and it may rise further on an increase in import demand. Now an exporter gets nearly Tk 74 for a dollar.
Bangladesh fixes its currency price (taka) to the dollar only that is helping it avoid volatility in the global exchange rate, according to the analysts.
“Single currency pegging is paying off for Bangladesh,” said Motiur Rahman, head of treasury of Prime Bank. “It's good in the context of our country,” he added.
Pegging is a method of fixing a country's currency to stay at a certain rate below or above another country's currency. When a country pegs its money to a commodity -- gold, silver, uranium -- the value of the currency would then be in direct proportion to the value of the commodity.
Ninety five percent of Bangladesh's total external trade worth $56 billion in fiscal 2010-11 was done in the dollar. Though Bangladesh follows a floating exchange rate, it is often managed by the central bank.
“The dollar may weaken across the globe, but not in Bangladesh…the taka will not be stronger as there will always be a demand for the greenback,” said Ashim Kumar Saha, head of treasury of NCC Bank.
In different countries, the dollar fell after Standard & Poor's downgraded US credit rating on Friday last. The dollar was as low as 74.85 Swiss centimes before trading at 76.41 centimes as of 8:31 am on Monday in London from 76.74 in New York on Friday.
Japan has already sharpened its warning to currency markets on Thursday in the wake of the yen's rise near record highs against the dollar, keeping markets jittery about the possibility of a second round of intervention. Against the 17-nation euro, it declined to $1.4366 from $1.4282.
“The situation may go in favour of Bangladesh,” said Ahsan H Mansur, executive director of Policy Research Institute, a private think-tank.
But exporters are not excited, as they have to pay more for a rise in costs.
“India and China have their own raw materials, but we've to import those from other countries by paying more for a weakening US dollar,” said Abdus Salam Murshedy, the immediate past president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
However, he feels the margin, which has been declining for months, may increase this time due to the competitive advantage over other exporting nations.
Murshedy fears a fallout impact on Bangladesh if its traditional markets -- the US and Europe -- face another shock.
Shafiul Islam Mohiuddin, the incumbent president of BGMEA, said the exporters would not get much advantage over their competitors as cost of doing business has already gone up here.
“Tax and wages of workers have gone up. Inefficiency is also taking toll on production,” said Mohiuddin.
http://www.thedailystar.net/newDesign/news-details.php?nid=198219
Comments
Post a Comment