Kazi Azizul Islam and Asif Showkat
Economists and commodity importers on Wednesday suggested that the government should be careful before framing any policy to allow depreciation of taka, as it may fuel inflation and erode the customs revenue.
If the government wants to encourage exporters and wage-earners abroad, they could be offered some other interim incentives, they said.
‘If taka is devalued [against dollar], import costs will rise,’ said Bangladesh Bank chief economist Mustafa K Mujeri in a BB report.
‘The government should in no way opt for any measures which will depreciate the value of taka now; such steps will hinder the falling trend of commodity prices and push inflation up again,’ said former Chittagong chamber president Saifuzzaman Chowdhury Javed.
Javed, whose company imports raw-materials for manufacturing cement, shoe and aluminum fabrications, suggested for the government to offer alternative fiscal incentive packages for exporters, in case it wants to support them.
A number of Khatunganj, Chittagong-based importers of edible oil, wheat and lentils and sugar, expressed to New Age the apprehension that any depreciation of taka would jack up costs of the next procurements by the commodity importers.
‘A weaker taka will further depress the commodity importers, who are already burdened with huge losses in their stocks during the recent months due to abrupt falls in commodity prices,’ said a top executive at a Chittagong-based oil refiner.
The Centre for Policy Dialogue executive director professor Mustafizur Rahman also offered cautious observations on possible outcomes of a devaluation of taka.
‘It is very hard to analyse how much the exporters will be benefited by a weaker taka and how much the other sectors will suffer,’ said Mustafiz.
‘Before taking any policy to trigger depreciation of taka, the government should remain cautious and study the situation thoroughly.’
KM Jamshedduzzaman, a former executive director of the Central Bank, analysed that most of the monetary indices now justify that the exchange
value of taka, at the present rates, is at the right position.
‘As it is floated, so the government cannot devalue the taka directly,’ says Jamshed, who, however, noted ‘It will be wise if the Bangladesh Bank and the government observe the trends for a long time before going for depreciation of taka.’
Bangladesh Institute of Development Studies research director Zaid Bahkt said in the current circumstance, the government should not go for a devaluation of taka against dollar, as it could have negative impacts on the local inflation rate.
‘The government could give assistance to local exporters through effective port services, cash incentives, low-cost gas and electricity and many other ways,’ he said.
Zaid suggested that finance minister AMA Muhith should be more cautious while talking with the media on sensitive issues like exchange rate. ‘The market can become unstable, if finance minister talks irresponsibly,’ he warned.
Annisul Haq, president of the country’s apex trade body, the FBCCI, however, told New Age that he could apprehend devaluation of taka against dollar as the country’s trading partners have already lowered the value of their currencies.
‘If the government does not devaluate taka against dollar, it should offer special exchange rates and incentives to the exporters,’ the chief of Federation of Bangladesh Chambers of Commerce and industry suggested.
Courtesy: newagebd.com
