Bangladesh’s trade competitiveness edges up as exchange rates stabilize

Business Desk :
The country’s global trade competitiveness improved as the Taka appeared to be settling near its fair value in exchange with other currencies after frequent depreciations.
Central bank data showed that the Real Effective Exchange Rate (REER) of the Taka against a 15-currency basket of its global trading partners dropped further last February amid stabilizing through recent measures.
The Reer index fell from 102.29 in January to 101.51 in February 2023 as the local currency depreciated more compared to currencies of its peer trading-partner economies across the globe, according to Bangladesh Bank data.
The Reer, measured by the central bank of Bangladesh against the currency basket, is said to be at its fair state when the value is 100.
This gauge can be used to assess the equilibrium value of a currency.
An increase in a nation’s Reer is an indication that its exports are getting more expensive and its imports cheaper.
The end result shows that its trade competitiveness is on the way down.
It is an indicator of the international competitiveness of a nation in comparison with its trade partners.
The rate of inflation in Bangladesh’s trading economies used to stay lower but this time the inflationary pressures there are higher due mainly to the war in Ukraine.
Bangladesh’s top trading partners are mainly China, the EU, and India.
The Reer considers the currencies and inflation readings of the top 15 trading partners.
Such a Reer index will help enhance the competitiveness of Bangladeshi-made goods on the international market, bankers and economists believe.
In the meantime, Bangladesh Bank continued with intervention in the foreign-exchange market with a total sale of nearly $11 billion up till March.