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Bangladesh gears up to counter perfect storm due to Ukraine war

Bangladeshi currency--the taka

The taka, Bangladesh’s currency, could depreciate in the near term, the country’s foreign ministry has said. The taka is currently trading above 86.3 to a dollar. A year ago the currency was pegged at around 85.5.

The Financial Express Bangladesh said that the country’s central bank has taken a series of measures in an effort to reverse the record slide in the value of the taka against the US dollar, but the moves appeared to be floundering.

The newspaper added that the foreign ministry’s estimate of the trade deficit touched $5.61 billion in the first half of the 2021-22 fiscal year, which was $6.87 billion in the same period last financial year.

Also read: Bangladesh underlines the need to cautiously spend foreign exchange reserves amid Sri Lanka's economic crisis

The Russia-Ukraine war has led to a surge in fuel and other commodity prices. Global price for Brent and WTI crude stood at over $100 mark.

Bangladesh’s import bill like many others has surged due to high global prices of commodities including fuel.

Bangladesh’s subsidy bill is also likely to rise due to higher subsidies on electricity, gas and fertiliser.

Last month, senior officials and authorities held a high-level meeting chaired by the country’s finance minister AHM Mustafa Kamal to take stock of the economic situation in Bangladesh. The authorities have already underlined the need to spend its foreign currencies cautiously.