Economists for ‘cautious appreciation’ of dollar

As the price of dollar against taka rises, the economists think the government should go for “cautious appreciation” of dollar keeping a balance with inflation.

They said this will help maintain financial stability of the country.

They also suggested bringing down the imports to avoid possible trade shocks in international business due to pressure on global economy.

Bangladesh Bank set an inter-bank exchange of US dollar at Tk 89 for international trade to curb currency volatility. The rate is Tk 1.10 higher from the existing one.

Bankers and researchers termed the policy measurement from central bank as mandatory for survival amid the pressure in international trade.

Bangladesh Institute of Bank Management (BIBM) director Prof Dr Shah Mohammad Ahsan Habib said the central bank has appreciated dollar in a cautious style to keep control over the market inflation.

“Bangladesh Bank takes time to appreciate dollar. The appreciation is inter-connected with market inflation,” he said.

“However, the appreciation is mandatory at the present situation. The monetary policy should be moderated at this situation when almost all countries are struggling to tame inflation,” Dr Habib said on Monday.

Policy Research Institute (PRI) Executive Director Ahsan H Mansur said with appreciation of foreign currency in the country the hardship of common people is increasing.

“The appreciation of dollar will increase the import cost. It will create an impact on market finally,” he said.

Dr. Mansur said, “The balance of payment is now around $35 billion that should be brought down. We should reduce the import to avoid the trade shocks.”

The economists also suggested cutting down the cost of incentives given to different sectors to reduce the pressure on foreign currency reserves.

“The central bank has revised the policy rate to control the inflation. It should be adjusted with other interest rates to keep the situation stable,” PRI executive director added.

The appreciation of dollar was fixed after a tri-partite meeting among Bangladesh Bank, Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) to discuss the current volatility in the foreign exchange market.