Bangladesh's currency taka to weaken against dollar: Fitch Solutions

The country’s currency will be Tk 87 per dollar in 2023, Fitch said.

Its earlier forecast said the exchange would be at Tk 84.75 per dollar this year and Tk 85 next year.

Bangladesh Bank data showed that the inter-bank exchange rate stood at Tk 85.80 compared to Tk 84.80 a year ago.

Since the last update of Fitch Solutions in August, the taka has depreciated 1.1 per cent against the dollar, taking the year to date exchange rate average to Tk 84.93 per dollar, it said.

Elevated global inflation and more hawkish stances by major global central banks has led to weakness amongst emerging market currencies and US dollar strength, it said.

"However, we also believe the Bangladesh Bank will continue to intervene to ensure Bangladesh maintains its export competitiveness, while not fuelling import inflation," the Fitch was quoted as saying by Bangladesh media reports.

The BB has continued to growtheforeign exchange reserve, which stood at $46.45 billion in October, up 13.3 per cent year-on-year, it said.

"The accumulation of reserves has helped offset taka appreciatory pressures, but we note that since end-August, the reserves have fallen 3.3 per cent, despite the taka depreciating," it said.

Fitch thinks that the Bangladesh Bank would look to contain taka depreciation to curb import prices and the resultant inflationary pressures.

Inflation increased 5.6 per cent year-on-year in June whereas it was 5 per cent in January this year.

Spikes in commodity prices and disruptions to supply chains have added to import prices. In particular, rising energy costs will put upward pressure on price growth, the company added.

Fibre2Fashion News Desk (DS)