FBCCI for halting Taka devaluation as forex reserves ‘steady’

The central bank governor asserted that there is no shortage of dollars in the country, according to an FBCCI leader

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has urged the central bank not to increase the exchange rate of the US dollar against the Taka as foreign exchange reserves have reached a “stable” level driven by the remittance inflow.

The request was made on Monday when an FBCCI delegation, led by the apex business body’s administrator, Md Abdur Rahim Khan, met Bangladesh Bank Governor Md Mostaqur Rahman and placed 12 recommendations.

FBCCI Secretary General Md Alamgir later told reporters: "We’ve asked not to increase the exchange rate as there is no shortage of dollars. The value of the Taka should not be depreciated further."

Alamgir added that the governor had confirmed there is no shortage of dollars in the country.

“There is no scope for increasing the exchange rate. If anyone increases it, action will be taken,” Alamgir quoted the governor as saying.

The Export Development Fund (EDF) was formed to support the export sector through lower interest rates. Currently, its size has decreased to $2 billion.

The FBCCI has demanded that this amount be increased to $5 billion.

It has also demanded that the loan tenure from the EDF fund be extended by one year to 5 years and the interest rate be cut from 5 percent to 2 percent.

The size of the fund once was as high as $7 billion.

In the wake of defaults in the fund, delays in repaying loans, and the loss of about $4 billion to a single group, the size of the EDF was reduced in line with criticism from economists and the conditions of the International Monetary Fund (IMF).

To support traders following the setback, Bangladesh Bank formed an “Export Support Pre-Financing Fund” of Tk 100 billion.

Alamgir said: "We have recommended that the size of the fund be increased gradually on a case-by-case basis."

Stating that business costs have increased following the Iran war, the FBCCI leader emphasised policy support for businessmen.

The meeting also discussed the issue of merging five banks to form a combined Islamic bank.

The recommendations include reducing interest rates to increase investment, maintaining normal dollar supply, reducing interest rates to single digits to deal with economic pressure, increasing credit facilities, and implementing easy-to-use loans, reschedulling, and incentive packages for affected industrial enterprises.