The Bangladesh Bank has warned that the taka is expected to continue depreciating against the US dollar due to significant outflows. The country’s external account deficit has increased, mainly driven by negative trade credit and a higher outflow of other investments. In the first quarter of the current fiscal year 2023-24, the financial account deficit reached $3.9 billion, compared to a surplus of $839 million in the same period last year.
This has resulted in a 28% depreciation of the local currency since January 2022. To mitigate the situation, the central bank has sold $3.17 billion in the foreign exchange market. The bank expects that policy initiatives aimed at boosting exports and remittances, as well as strong foreign direct investment and improvement in the trade balance, may stabilize the exchange rates in the coming months.
However, risks remain, including disruptions in the global energy and food markets, high inflation, and slower-than-expected global economic growth. Additionally, the economy faces challenges such as high non-performing loans in the banking sector. Overall, the macroeconomic trajectory remains on course, supported by robust agricultural performance and industrial production.Â
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