What does green chilli have to do with greenback?

FE Team | Published: May 12, 2024 20:27:47

Bangladesh appears to be taking the bait and falling into the market manipulation trap again and again meticulously orchestrated by a section of unscrupulous and speculative traders who are increasing in number, as are their nefarious activities. Take for example the recent exchange rate hike of the US dollar from Tk110 to Tk117. In less than 24 hours of this increase, prices of various essential commodities such as beef, eggs, Sonali chicken, local fish varieties, vegetables, and even green chillies shot up further. It's crystal clear that if the taka falls against the dollar more taka is needed to pay the dollar invoices. What puzzles most people, however, is how are locally produced essential good items such as vegetables affected instantly by the increase or decrease of the dollar?
Moreover, the recent increase in the dollar exchange rate occurred only last Thursday - the last day of the banking week. The traders, who raised their prices in response, citing the rate hike as an excuse, did not have time to open LCs following the surge. All commodities currently available in the market were imported at the previous lower exchange rate. So, their argument for hiking prices of commodities is untenable. When the taka appreciates, there is no record of downward price revision immediately. Neither did the stocks of these essential commodities deplete overnight. Only the absence of strict market monitoring and control over traders can explain the reason behind this absurd price hike.
In a free market economy, the market should be allowed to operate on its own and follow its own course, where the demand and supply determine price structure. However, the principle of demand and supply in Bangladesh has been distorted by rampant market manipulation with a view to jacking up prices essentials. Recently the government fixed prices of over a dozen essential items, but has failed to implement it. Many even allege government agencies are protecting the interest of vested quarters, instead of protecting the common people from the onslaught of runaway inflation.
The International Monetary Fund's World Economic Outlook report suggests that high inflation may persist in Bangladesh this year too, echoing concerns raised by the World Bank in April about short-term economic pressures. According to the latest data from the Bangladesh Bureau of Statistics (BBS), the country's inflation climbed to 9.81 per cent in March, up from 9.67 per cent in February. The Director General of the Bangladesh Institute of Development Research (BIDS) Binayak Sen, however, claims that food inflation has already surged to 15 per cent in the country. High inflation adversely impacts people's lives as well as prolongs economic uncertainty. Reining in inflation, therefore, is a major priority for the government. Experts say the dollar's appreciation could further inflate the prices of imported goods, but prudent management of macroeconomic fundamentals could mitigate its impact. To address inflation in the short and medium terms, experts recommended increasing production, ensuring adequate market supply, supporting industrial productivity enhancement, and enhancing monitoring to balance supply and demand. Strengthening market management and institutional capacity is also crucial. Besides, bolstering the Competition Commission to control inflation and increasing surveillance to combat unscrupulous syndicates are also long overdue to ensure market stability and safeguard consumers' interests.