Country Report Bangladesh July 2000 Updater

Economic forecast: Exchange rates

The taka was devalued by 4.4% in calendar year 1999, as the government attempted to improve the country's export performance, following pressure from leading export bodies in the country, as well as the World Bank and the IMF. The currency will remain under pressure, as high import payments and other outward remittances, in the form of higher debt-servicing costs, together with a loss of export competitiveness, particularly given the recent depreciation of the Indian rupee against the US dollar, will increase the need for further devaluations in 2000. However, low levels of inflation and an improvement in export performance will reduce pressure on the taka towards the end of 2000 and in 2001. We thus expect the annual average rate of depreciation to remain low, at 5.2% and 4.9% in 2000 and 2001 respectively.

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