BB study soon to know about real position of taka against dollar

---

FE Report
The central bank is going to conduct a study on exchange rate policy options for Bangladesh in the backdrop of the global financial crisis.
Under the study, the Bangladesh Bank (BB) will examine the real position of the local currency against the US dollar considering the recent fallouts from the international financial crisis.
"We've planned to conduct an in-depth study on exchange rate policy options to cope with the global financial meltdown's impact on Bangladesh economy," a BB senior official told the FE Sunday.
The central bank's Policy Analysis Unit (PAU) will conduct the study considering the movements of currencies of competitor countries like India, Pakistan and Vietnam, the official added.
"....any large depreciation of Bangladesh Taka (BDT) is not likely to increase Bangladesh's exports appreciably in the present global situation," the PAU said in a study report.
The policy paper on Navigating the Global Financial Storm: Challenges for Bangladesh also said the present circumstances and the current state of macroeconomic fundamentals do not provide enough justification of pursuing any policy of letting the exchange rate depreciate to a significant extent.
On the other hand, it might adversely affect the country's gradually improving domestic growth prospects through raising import cost of capital goods and other essentials, the study noted.
With priority to reducing inflation expectation and the inflation rate from its current double digit level, avoid market interventions, so that Taka does not depreciate to a large extent, the study said.
During the last July-September period, the nominal effective exchange rate (NEER) depreciated marginally while the real effective exchange rate (REER) index appreciated.
The REER-based exchange rate shows that Taka remained undervalued by around 10 per cent during September last against major trading partners.
According to the data, although the REER-based exchange rate rose in September last, the NEER is still higher than the REER-based exchange rate indicating that Bangladesh enjoys some export competitiveness.
Meanwhile, the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) has started a similar study to know the real position of the local currency against the US dollar considering the SAARC countries' currency movements.
"Our sub-committee is now working to prepare the study report that would be submitted to the executive committee by the end of this month," a senior member of the BAFEDA told the FE.
The country's forex dealers' apex trade body earlier formed a three-member sub-committee to prepare the study report considering the latest exchange rate movements in the SAARC countries, particularly India, Pakistan, Sri Lanka and Nepal.