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Dollar saved apparel exports of Bangladesh

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Bangladesh apparel exports
Bangladesh apparel exports

The positive dollar-taka exchange rate has worked well in the favor of the apparel exporters in the outgoing calendar year, cushioning the fallout from the uncertain political climate in the Western world. In the first 11 months of 2017, Bangladesh exported garment items worth $26.40 billion, up 1.38% year-on-year, according to data from the Export Promotion Bureau.

At the start of the year, the greenback traded between Tk78 and Tk79 and during the course of the year it crawled up. On Dec 20, it traded at Tk83.20. “The current exchange rate is favourable for exporters. We should handle the exchange rate softly,” said Ahsan H. Mansur, executive director of the Policy Research Institute of Bangladesh. He went on to suggest that the dollar can be allowed to appreciate to up to Tk85. If it goes past the Tk85-mark, it will be bad for the balance of payment and macroeconomic stability as imports would become costlier.

However, exporters want further devaluation of the local currency. “The exchange rate has only started becoming export-friendly,” said Faruque Hassan, managing director of Giant Apparels, a leading garment exporter. The local currency should be devalued further against the dollar to compensate for the rising cost of production such that exporters can continue to be competitive on the global stage.

At least 10 %devaluation of the currency is fine for the sector as garment exporters have faced low exchange rate over the last five years, he added. “The exchange rate is still not up to the mark when compared with our competing countries like India and Turkey,” said Abdus Salam Murshedy, managing director of Envoy Group, another major garment exporter.