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Currency slide doesn’t help Bangladesh exporters

  

When the currency began sliding against the dollar textile and readymade garment exporters in Bangladesh were supposed to gain from the development. But the reality turned out to be different for them as they saw lower profits or even losses.

Bangladesh’s currency depreciated by about 25 per cent against the dollar between February and September, driven by the Russia-Ukraine war.A currency depreciation, if orderly and gradual, usually improves a nation’s export competitiveness, but exporters in Bangladesh could not make the most of the depreciation since they had to buy dollars at a higher price while opening letters of credit to import raw materials needed to serve the global markets.

Most textile and apparel manufacturers in Bangladesh purchase raw materials from international markets and they have had to pay higher prices while opening letters of credit. So though exporters benefited from the depreciation of the local currency, the gains were gobbled up by the huge difference in the buying and selling price of the dollar. As a result, costs rose. Prices of raw materials surged in the global market at the beginning of the quarter before falling towards the end.

Insufficient energy supply also hurt the textile and garment sectors since they are heavily dependent on energy.

 
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