#Title

Exporters don’t get full benefit from taka slide

They blame high costs of production amid inflationary pressure
REFAYET ULLAH MIRDHA
Exporters in Bangladesh are unable to take the full benefit of the devaluation of the taka against the US dollar amid ongoing inflationary pressure and rising production costs, according to industry people.
The devaluation of a country’s currency can increase its export earnings as manufacturers can take orders even though buyers offer lower rates than in the past, making them more competitive on the global market.
Recent data shows that taka, the local currency, has depreciated by about 28 percent as the government is adjusting the exchange rate in line with its strength against the US dollar.
As such, the official exchange rate now stands at Tk 110.50 per US dollar in case of import payments while it is Tk 110 when it comes to export earnings.
The exchange rate between the taka and the US dollar was around Tk 85 up till January last year, after which the local currency began its steep descent into the current range, as per central bank data.
Bangladesh’s taka has been facing volatility for more than one-and-a-half years as external payment pressure continued to grow while export and remittance did not grow as required.
Previously, local exporters had urged for the devaluation of the taka against the US dollar as some competitor countries were enjoying the benefits of devaluing their respective currencies.
And in the face of increased external payment pressure, Bangladesh started to see its foreign reserves fall, with the taka losing strength against the US dollar and other major currencies.
Exporters said Bangladesh’s exports became more competitive following the devaluation of the taka, while the exporters themselves enjoyed higher returns in terms of taka against each greenback.
Besides, this allowed manufacturers to enhance their earnings from products made using locally-sourced raw materials considering their increased prices abroad.
However, elevated inflation, which has been hovering at around 9 percent for nearly one year now, eats up much of the gain.
Exporters said the cost of doing business and production rose as prices of raw materials, transport and fuel rose by nearly 100 percent each, alongside the increasing price of food in the domestic market.
Still, local value addition increased by nearly 71 percent over the past year due to the growing use of locally-sourced raw materials.
This is because producers are opting for more readily available raw materials rather than importing them in order to maintain the shorter lead times set by international clothing retailers and brands.
As a result, garment makers have been reducing their overreliance on imported yarn and fabrics to ensure quick delivery of goods year-round to remain competitive in the fierce business.
“So, we are definitely getting Hassan