Taka depreciates 60% since 2015, contributing to inflation: Cenbank chief

The local currency has depreciated nearly 60% over the past ten years contributing to the current elevated inflation, said Bangladesh Bank Governor Md Mostaqur Rahman on Saturday.

Bangladesh is an import-dependent economy, with industrial output also dependent on foreign inputs, he said, adding that fall in the taka exchange rate invariably adds to consumer inflation pressures.

He urged the banks to cut profit margins on dollar sales to importers by at least 50 basis points to help mitigate the price pressures on consumers.

The central bank chief made the remarks at the 5th Bangladesh Economic Conference held at a hotel in the capital.

In the July 2015-June 2016 fiscal year, a US dollar was priced at Tk78.26, which rose to Tk122.30 in the last fiscal year.

Mostaqur Rahman urged economists and analysts to use 2015 as the base year for forex calculations instead of 2022 to provide more accurate picture of the country’s economic landscape.

Cutting share of corporate loans

The Bangladesh Bank governor said the country’s foreign exchange reserves and private sector credit growth remains weak despite some improvements since he took office earlier this year.

From next year, lending to corporate entities could be reduced to around 45% from the present 70%-80%. Under a new proposal, the majority of the remaining 25%-35% will be disbursed among small- and medium-sized enterprises to help prop up private sector lending, and boost economic output, Mostaqur Rahman said.