Home Bangladesh Dollar will become more expensive
Bangladesh - July 31, 2023

Dollar will become more expensive

Interest rates on foreign
loans to be increased

Industry Report: The US central bank, the Federal Reserve System, has once again raised policy interest rates to control the country’s inflation rate.
In this phase, the policy interest rate increased by 10.25 percent. As a result, the interest rate has increased from 5.25 percent to 5.5 percent. This information was received from the webpage of that organization on Thursday afternoon Bangladesh time.
According to sources, due to this, the price of the dollar will increase in the international arena. This will affect Bangladesh as well. As a result, the price of the dollar may increase in this country as well. There is no alternative to increasing foreign exchange earnings to counter the dollar crisis.
But the income in this sector is not increasing. On the contrary, the cost is increasing. Meanwhile, the US central bank is following a contractionary monetary policy to control the inflation rate or reduce the flow of dollars. Interest rate is being increased under this. A total of 11 policy rate hikes have taken place in the last 16 months.
As a result, local commercial banks have also raised interest rates, making the dollar more expensive. The interest rate on the US 6-month Treasury bond has now risen above 5 percent. Its interest rate was less than 1 percent a year and a half ago.
Due to this, the price of dollar is increasing in the international arena. In addition, the dollar crisis in Bangladesh and the increase in the price of goods in the international market have increased the cost of imports. The dollar has gained about 29 percent in the past year and a half. In some cases, it has increased more than that.
The US central bank has raised interest rates to the highest level in 22 years. This rate was below one percent at the beginning of last year. Their policy interest rates have been rising since April following the Russia-Ukraine war in February last year.
which is still ongoing. The Federal Reserve said that this rate may increase further in the future. This rate may be increased by 1.25 percent this year.
According to sources, due to this, the price of dollar will increase internationally. Meanwhile, the International Monetary Fund has also given the impression that the price of the dollar will rise further. The price of dollar has increased in Bangladesh and now the dollar is being sold at a rate of more than Tk 109 in imports. Cash dollars are selling at Tk 111 to Tk 112.
Three-month or six-month forward dollar is selling at Tk 113 to Tk 114. Meanwhile, remittance flow and export earnings are not increasing as much. Even if import is controlled, if it is kept controlled for a long time, there will be more negative impact on the country’s import-dependent business and trade.
Considering this, the central bank is showing some relaxation in imports. Besides, the pressure of foreign debt repayment is also high. As a result, the price of the dollar may increase further in the future.
Increasing US policy interest rates will also increase foreign debt interest rates. As a result, the country will take less foreign debt. In addition, Moody’s and S&P Global have recently downgraded Bangladesh’s foreign debt, so now the debt will be less. Additional interest has to be paid against those that are available.
Meanwhile, the Federal Reserve has hinted that policy interest rates may be raised further to control inflation. Currently, the US inflation rate has been able to be brought down to 6 percent. It rose to a peak of 8.5 percent last August. They have set a target to reduce this rate to 2 percent by next year.

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