WB recommends crawling peg for Bangladesh to build reserve

By making formal remittance channels more attractive and reducing the financial account deficit through enhanced trade credit and external financing, this approach could bolster external reserves, as stated in the latest Bangladesh Development Update report released recently.

Currently, the official exchange rate stands at Taka 110 per dollar, while unofficial rates hover around Taka 115-120. The Bangladesh Bank’s Monetary Policy Statements from January to June 2024 suggest a potential adoption of the crawling peg system, although the timeline and technical details remain undisclosed.

The World Bank emphasised the urgency of exchange rate reforms to fortify external buffers and ensure adequate foreign exchange liquidity for debt servicing and other external obligations even as delayed reforms pose significant risks, potentially depleting international reserves to critical levels and perpetuating import restrictions and input shortages.

Furthermore, the report underscored the adverse impact of insufficient natural gas supply and limited LNG imports due to forex shortages on industrial production and investment.

With gross foreign exchange reserves plummeting to $20.8 billion in February 2024, the World Bank stressed the importance of implementing a sustainable exchange rate policy to address these challenges effectively.

Fibre2Fashion News Desk (DR)