Rupee fall may destroy Bangladesh Economy

[TopCat]

Indian rupee fall to help Bangladesh - bdnews24.com

Indian rupee fall to help Bangladesh

From Rupees 54 to a US dollar even a month ago, the exchange rate is now hovering around Rupees 60 to an US dollar.

Experts predict this may fall further.

The Indian Finance Minister P Chidambaram says there is no cause for worry and the correction will start soon.

The positive in the tale is that this will make Indian exports more competitive.

But for the tens of thousand of Bangladeshis who visit India for medical treatment, education, business or just to meet friends and relatives, the changes in the exchange rate means they have more Indian rupees for every dollar exchanged on arrival.

The icing on the cake is that the Bangladesh Taka has appreciated sharply vis-à-vis the US dollar -- from TK 84 to an US dollar a year back, the exchange rate hands between Tk 77-78 to an US dollar now.

So for the likes of Masuda Haque who is here for retina therapy, it means she got more dollars for the Takas she paid in Dhaka before embarking on the journey to India than eight months ago when she last came to Kolkata.

And she got more Indian rupees, much more, when she changed the dollars here on arrival.

“It is a two way gain and I am happy about it. This is possible because our Taka has become stronger and the Indian rupee weaker against the dollar,” said 45-year old Masuda.

Currency trading in Kolkata is buoyed by visiting Bangladeshis.

Dozens of foreign exchange dealers in central Kolkata's business district from Park Circus to Sealdah are dotted with Bangladeshis arriving with wads of US dollars and taking away Indian rupees.

From patients like Masuda to students like Habib Tanvir, Bangladeshis in India for treatment, education or business are loving the way it is at the moment.

“Hope it stays this way,” says Dhaka trader Mohammed Shamsul. “I can order more for the same amount from India now.”

But while it may be great for Bangladeshis visiting India, it may not be such good news for the bilateral trade.

The two-way trade between India and Bangladesh in 2011-12 stood at $4.4 billion. While India exported goods worth $3.8 billion to Bangladesh, imports to India were only $0.6 billion.

Despite India granting duty free access to Bangladesh in September last year, Bangladesh's exports to India remained low and confined to edible fruit and nuts, fish, apparel and textiles.

India exports cotton, cereals, nuclear reactors, boilers and machinery to Bangladesh.

Recently, India also slashed its sensitive list under the South Asian Free Trade Agreement (Safta) for less developed countries.

But the fall of the rupee will make Indian exports more competitive and Bangladesh may end up importing more from India for obvious reasons.

But the appreciation of the Taka will make exports from Bangladesh to India less competitive.

Specially if the Taka appreciates sharply vis-à-vis the Indian rupee.

In 1986, an Indian rupee fetched Tk 2.5. That came down to TK 1.14 to a rupee in 1999. Despite up and downs over the last decade, it has hovered around TK 1.2 to 1.3 for a rupee.

If the rupee falls further, Indian exports to Bangladesh will rise but not the other way round, Bangladesh diplomats in India apprehend.

 

[Srinivas]

Personally I don't want this kind of situation, BD's economy should prosper

A Good and prosperous neighbour is in the interest of India

 

[PoKeMon]

Indian rupee fall to help Bangladesh - bdnews24.com

So apart from medical tourists, a falling rupee is bad sign for bangladesh.

The article clearly states that falling rupee will make export competitive and bangladesh will end up importing more fromindia than exporting to india.

Exporting more and more will reduce fiscal deficit and help indian economy.

 

[TopCat]

So apart from medical tourists, a falling rupee is bad sign for bangladesh.

The article clearly states that falling rupee will make export competitive and bangladesh will end up importing more fromindia than exporting to india.

Exporting more and more will reduce fiscal deficit and help indian economy.

We import essentials from India and weaker rupee means less dollar we need to spend. As our export to India is very minimal so net dollar gain is positive and good for BD.

 

[Gentle Typhoon]

I also want all Bengalis (Both Indian and Bangladeshis) to prosper, they are one of most unfortunate community who witnessed so many catastrophic events. Everyone exploited them, Britishers/Indians/Invaders/Pakistanis. So many famine, riots, divide and rule struck this part of sub-continent. Bengalis have one of best food, art and literature. Both Kolkata and Dhaka are are at advanced stage of rotting. I wish former glory returns to these mega-cities.

 

[PoKeMon]

We import essentials from India and weaker rupee means less dollar we need to spend. As our export to India is very minimal so net dollar gain is positive and good for BD.

Indian export to BD will rise but not the import. Result - widen trade deficit for BD in favour of India.

 

[mb444]

Indian export to BD will rise but not the import. Result - widen trade deficit for BD in favour of India.

We buy inputs for our industry from you such as cotton. As that becomes cheaper BD competitiveness increases.

We buy rice and other primary stuff from you that we do not grow in sufficient amounts. Again that's good news from us.

The trade deficit will increase but that is irrelevant all it means is that we will buy less from china for example. BD economy is export driven and our primary markets are US and Europe.

This is s fairly non issue BD is prevented from selling anything in the Indian market by your tarrif and para tarrif barriers.
fall in your currency would have mattered if there was any type of equilibrium in trade between us.

BD will buy more from India. As purchaser we buy from wherever it is cheaper.

Fall in rupee will not harm BD at all. It's actually represents an opportunity and makes our finished goods more competitive.

 

[eastwatch]

Now a days Darji work has been taken over by high tech sewing machine with multiple color threads, you need to see any garment factory in India then respond

Better come or send some of your technicians to learn BD way of making garments. Why to go and see 3rd grade factories in India which has lost to BD? Have you ever been to a factory? If so why do you think the garments are all stitched by the robots and computers? Darji hands are always required. All are not knit items.

 

[idune]

Some indians for their misery are tying to find solace in harm to Bangladesh economy - that goes to show thinking in indian mind.

Indians utterly filed to realize that beside being competitive, Bangladesh enjoys duty free access to major markets in EU, Canada China and for some category in South Korea. India can not get that. Unless india can compete in higher value products (not garments) their shining india is as good as hoax. I do see many decent indians realize that reality.

 

[eastwatch]

Indian export to BD will rise but not the import. Result - widen trade deficit for BD in favour of India.

You may be right that Indian export will rise because the Bd merchants will buy less from Pakistan and Uzbekistan and more from India. However, while the Indian export volume rises, export earning may not. Moreover, BD will not depend upon only the Indian cheap source. It will keep on relying on diverse sources.

Any way, a weak INR is not able to destroy our exports to EU and US. Note that these blocks want a strong BD in the future because it serves their geopolitical interest.

 

[Anubis]

You may be right that Indian export will rise because the Bd merchants will buy less from Pakistan and Uzbekistan and more from India. However, while the Indian export volume rises, export earning may not. Moreover, BD will not depend upon only the Indian cheap source. It will keep on relying on diverse sources.

Any way, a weak INR is not able to destroy our exports to EU and US. Note that these blocks want a strong BD in the future because it serves their geopolitical interest.

I think we should buy more stuff from India while the price is cheap....we could stock up on cotton!

 

[[Bregs]]

Better come or send some of your technicians to learn BD way of making garments. Why to go and see 3rd grade factories in India which has lost to BD? Have you ever been to a factory? If so why do you think the garments are all stitched by the robots and computers? Darji hands are always required. All are not knit items.

Third grade factories ? try google only one the Arvind mills its more then enough for you to satisfy your fantasy

 

[naveen mishra]

We buy inputs for our industry from you such as cotton. As that becomes cheaper BD competitiveness increases.

We buy rice and other primary stuff from you that we do not grow in sufficient amounts. Again that's good news from us.

The trade deficit will increase but that is irrelevant all it means is that we will buy less from china for example. BD economy is export driven and our primary markets are US and Europe.

This is s fairly non issue BD is prevented from selling anything in the Indian market by your tarrif and para tarrif barriers.
fall in your currency would have mattered if there was any type of equilibrium in trade between us.

BD will buy more from India. As purchaser we buy from wherever it is cheaper.

Fall in rupee will not harm BD at all. It's actually represents an opportunity and makes our finished goods more competitive.

in any case you don't need to worry , what ever be BD has achieve today , it is because of their guts and hard work, not depended on foreign aid ..........

i find Bangladeshi is role model for rest of Muslim world ,first revolution for nationality ,second revolution against secular vs redical

your thoughts and believe makes you different for rest of the world,
again i am repeating, you growth may be sluggish but it is solid and has strong base,which is done by your people without external support

i have work with KDS group ( garment company) , one of largest exporter in Bangladesh, in 2002 when special sanction was lifted (being third world country) on garment from europ, we all were worried that garment industries is gonna to impact badly ,
but still KDS is largest exporter in garment, not because of special grant ,it is because of their product quality and comparative price

 

[PoKeMon]

You may be right that Indian export will rise because the Bd merchants will buy less from Pakistan and Uzbekistan and more from India. However, while the Indian export volume rises, export earning may not. Moreover, BD will not depend upon only the Indian cheap source. It will keep on relying on diverse sources.

Any way, a weak INR is not able to destroy our exports to EU and US. Note that these blocks want a strong BD in the future because it serves their geopolitical interest.

Actually we differ in our perception perhaps. I am not trying to prove that BD will get "badly" hurt but Indian export will get competitive helping us reducing our trade deficits.

Export earning will depend upon the extent by which we can increase our export. If increase is minimal, then rupee depreciation will neutralize it but if export increase is substantial then there will be a net rise in earning. So cant comment over it as of now.

EU and US is equally(if not more) interested in India. I may sound harsh(apology), but BD do not count really in strategic affairs right now unless she opens herself for military bases of either US or China. US base are highly unlikely and china wont help in increasing your export, they are themselves a big manufacturing hub.

 

[PoKeMon]

We buy inputs for our industry from you such as cotton. As that becomes cheaper BD competitiveness increases.

We buy rice and other primary stuff from you that we do not grow in sufficient amounts. Again that's good news from us.

The trade deficit will increase but that is irrelevant all it means is that we will buy less from china for example. BD economy is export driven and our primary markets are US and Europe.

This is s fairly non issue BD is prevented from selling anything in the Indian market by your tarrif and para tarrif barriers.
fall in your currency would have mattered if there was any type of equilibrium in trade between us.

BD will buy more from India. As purchaser we buy from wherever it is cheaper.

Fall in rupee will not harm BD at all. It's actually represents an opportunity and makes our finished goods more competitive.

Competitive is wrong word here, profitable should be.

On BD perspective if they just switch between importers without net increase in total imports then its OK but it doesn't happen generally. BD might be lured to buy more non-ingredient things which they usually manufacture within but with comparative higher cost. Here comes the devil when Indian goods start competing with local industry.

Also competition in US/EU market will increase with same indian goods available in much cheaper price. 20% OFF is there -- a BIG BIG offer. BD can cut down its prices and still maintain its profitability but still US/EU will find indian goods 10% cheaper -- enough to make them rethink.