Bangladesh Garments and Knitwear Exporters Feel Upbeat Over Strong US Dollar

Trade & Policy

Bangladesh Garments and Knitwear Exporters Feel Upbeat Over Strong US Dollar

Despite uncertainty plaguing the West, a strong US dollar saved Bangladesh from the blushes of export dips in the current calendar year that is nearing its end. In fact, the USD strengthening against the BDT had a buffer effect for the Bangladeshi garment exporters.

Till November 2017, the country was able to export garments and accessories to the tune of USD 26.40 billion. This figure indicates that the exports have grown by 1.38 percent compared to the previous year. The figures were released by Bangladesh’s Export Promotion Bureau recently.

Earlier, when the year began, the USD stood at 78 BDT and later drifted to 79 BDT. However, as the year nears an end, the USD currently stands at BDT 83.20.

The Policy Research Institute of Bangladesh expressed the sentiment that the revised exchange rates between BDT and USD are highly favourable for exporters. The institute spokesperson was of the view that it would be good for Bangladesh to play mellow on the exchange rate. “We won’t mind it, if USD shoots up to BDT 85,” he said, adding, “If the USD climbed beyond the 85 mark it would adversely affect the balance of payments. This is so, because Bangladesh’s imports would become a lot costlier.”

The exporters' bodies like Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) were however, of the opinion that the BDT will have to be further devalued. A leading exporter pointed out that it’s just started raining money for us as the rates turned export-friendly over a period of time. The trend should continue.”

The exporters’ bodies in the garment sector emphasized that a minimum of 10 percent depreciation of the local currency would serve the exporters good. “We have been faced with low exchange rate since 2013 and things have just begun to change for the better. The rising cost of labor and production can be adequately compensated for in this event. It will make us globally competitive in the garment sector.” they said.

Garment exporters also made comparisons with neighboring competitors like Turkey and India and said the current exchange rate proved to be below par against these two denominations. However, there is also a brighter side to the story of Bangladesh’s growing corpus of exports. Of late, the country has been exporting value added garment items. Besides, even to the hawkish eyes of the West there was no untoward labor incident or political unrest in 2017.

For the year 2018, the export bodies sounded a cautiously positive note stating, “As of now we are on firm turf and we have received a favourable feedback from the two overseas factory inspection agencies, namely Accord and Alliance.”

The other beacon of hope for Bangladesh’s garment sector is the indication that new entrepreneurs have already put their money in the garment sector engendering a robust number of fresh factories that will handle the work that has taken a shift from China.