Costlier dollar may add to inflationary pressure

The prices of imported goods including food items, electronic goods and capital machinery are likely to see a significant hike due to the continued rising price of dollar, exacerbating the inflationary pressure on the economy, market operators have said. They also said many importers are failing to open letters of credit (L/Cs) due to higher prices of the greenback. The leading importers warned that the prices of imported wheat, rice, pulses and chickpeas are expected to rise by 5.0-10 per cent due to the depreciation of Taka. "The dollar/Taka exchange rate was Tk 74.80 Wednesday. It was around Tk 70 a few weeks back," said Abul Bashar, chairman of Masud and Brothers, a leading importer of food items. He said there was no immediate impact of the surge in dollar price as importers have large quantities of reserve of different food items. Mosharrof Hossain, a Chittagong-based importer, said: "Market remained stable due to substantial stocks. Otherwise, it would have gone awry immediately." But prices of electronic goods including television sets, refrigerators, and products relating to video productions have already surged significantly in the local market. The prices of video tapes have rose by Tk 400 to Tk 2500 over the past few weeks due to the higher dollar prices, said Nizam Uddin Ahmed, owner of Touch Electronics at Stadium Market in Dhaka. Prices of refrigerators and television sets have also increased by Tk 4000-Tk 5000 in the recent weeks. The dollar has appreciated against the local currency by around 7.0 per cent in three months, although the greenback is losing out to other major global currencies. Political parties have alleged that some influential persons have transferred money from the share market leading to dollar shortages in the country. But bankers say, slide in remittances and higher cost of imported goods resulted in the dollar crisis. But the country's export has been growing on a sustained basis. Mohammad Ali, chairman of Imam Group, told the FE: "The higher prices of dollar are pinching us severely. Right at this moment I am not interested in new imports." Bangladesh has been witnessing volatility in foreign exchange market after it had faced a crunch in the money market in December and January. The call money rate rose as high as 190 per cent a few months back, but has come down to 5.0-6.0 per cent now.