Severe dollar crisis hobbles Bangladesh businesses

Aljazeera reports that there is a severe shortage of greenbacks in Bangladesh due to its dwindling foreign reserves and a sharp drop in the value of its taka currency against the dollar. In the past six months, Bangladesh’s foreign reserves have dropped below $32bn from $39bn while the value of the taka has fallen by 27 percent from 84 to the dollar to 107.

The South Asian nation has been facing severe economic hardship since Russia’s invasion of Ukraine a year ago. In its import-dependent economy, rising global fuel oil and other commodity prices have caused nearly double-digit inflation and depleted foreign reserves.

To protect the declining reserves, the government had stopped all non-essential imports and reduced the supply of dollars to commercial banks. This has not only forced banks to refuse new letters of credit applications but also has made their promised payments to foreign suppliers for previous imports uncertain.

Local media reported that at least 20 banks with negative balances in their foreign currency holdings could not make these payments.