Market-driven interest rate returns after four years

After a gap of four years, the banking sector in Bangladesh has returned to a market-driven interest rate regime at the prescription of the International Monetary Fund (IMF), in order to step up its fight against elevated level of inflation. The central bank also raised the policy rate by 50 basis points to 8.5 percent, aiming to make money costlier. The move to a market-based lending rate was one of the conditions for the IMF’s $4.7 billion loan to Bangladesh, the third tranche of which is expected soon. The flexible interest rate and the exchange rate will also help reduce capital flight from Bangladesh. This is good news for the economy. Bankers welcomed the decision, opining that the lending rate may rise initially and a market-based rate was necessary to reduce inflationary pressures and make the banking sector healthy.

Source: https://www.thedailystar.net/business/economy/news/market-driven-interest-rate-returns-after-four-years-3605636

Perodua Car Models enters Bangladesh partnering with PHP Motors

PHP Motors, a concern of PHP Family, has tied up with Perodua, a top Malaysian automobile brand, to assemble their cars and SUVs in Bangladesh and sell them in the local market. The Chattogram-based automobile company is set to launch four models of Perodua at an event in the capital on 9 May, 2024. Mohammed Akther Parvez, managing director of PHP Motors, told The Business Standard, “We are going to launch Perodua ARUZ, a 1500cc 7-seater SUV; Perodua Bezza, a 1329cc sedan; Perodua MYVI, a 1500cc hatchback, and Perodua AXIA, a 1000cc hatchback, in Dhaka. PHP Motors established its factory at Saraipara Halishahar in Chattogram in 2015 with an investment of Tk400 crore. The plant became operational in 2017 and started assembling cars. Beginning its journey, PHP grabbed around 20% of the sedan’s market share in Chattogram with its assembled cars. Its factory, which has been running at full capacity since 2019, is capable of assembling 1,200 units a year.

Source: https://www.tbsnews.net/economy/perodua-enters-bangladesh-partnering-php-motors-846651

Education, health get priority over transport, energy in FY25 ADP

The government has increased allocations for the health, education, and agriculture sectors in the proposed Annual Development Programme (ADP) for the upcoming FY25. Allocations in previously prioritised sectors like transport and communication, power and energy, housing, and community facilities have been reduced compared to the current FY24.

the size of the proposed ADP for FY25 was estimated at Tk265,000 crore, marking an 8.16% increase compared to the ADP of FY24. In the proposed ADP, the allocation from the government fund has been estimated at 62.3% of the total allocation and foreign financing at 37.7%. This contrasts with the figures of 64.3% and 35.7% in the ADP of FY24, respectively. The allocation of government funds in the proposed ADP has decreased by Tk4,000 crore or 2.37% compared to the current fiscal year’s ADP. However, when compared to the current fiscal year’s revised ADP, the allocation of government funds has increased by 2.17%.

Source: https://www.tbsnews.net/economy/education-health-get-priority-over-transport-energy-fy25-adp-845721

Taka tumbles in deepest single-day depreciation

Bangladesh taka tumbles in the biggest single-day depreciation against the US dollar as the regulator relaxed exchange rate and raised price of the greenback by Tk 7.00 to Tk 117. Under a reform recipe evidently shaped in line with IMF loan terms, the central bank Wednesday also announced another decision deregulating interest rate to be fully market-driven. The abrupt leap in the taka-dollar exchange rate comes after the Bangladesh Bank (BB) launched crawling-peg exchange-rate system avowedly to reduce the prevailing volatility on the forex (foreign currencies exchange) market. Consequent on the decision, the Bangladeshi currency weakened 6.36 per cent in a single day, although the value of taka had decreased 5.77 per cent in the entire past year of 2023. According to the resolution of the MPC meeting, under the new system, a Crawling Peg Mid-Rate (CPMR) is set at Tk 117.00 per US dollar. Because of the rise, the upper ceiling of the IRC, called Standing Lending Facility (SLF), has also increased by 50 basis points to 10.00 per cent from 9.50 per cent while its floor rate, known as Standing Deposit Facility (SDF), got enhanced by 50 basis points to 7.00 per cent from 6.50 per cent. Economists welcome the monetary steps taken by the central bank on hope that the course of cure will work to stabilise the financial market, provided the initiatives are implemented firmly. They think the central bank should have done it at least one year before and could avoid present volatility on the money market.

Source: https://today.thefinancialexpress.com.bd/first-page/taka-tumbles-in-deepest-single-day-depreciation-1715191567

BSEC gets two new commissioners

The government yesterday appointed two commissioners at the Bangladesh Securities and Exchange Commission (BSEC) for a four-year term while extending the tenure of an existing commissioner by another term. The newly appointed commissioners are: Mr. Mohammad Mohsin Chowdhury, former director general of Bangladesh Karmachari Kallyan Board, and Mr. ATM Tariquzzaman, managing director of the Dhaka Stock Exchange. The new commissioners have been appointed for a period of four years beginning from May 20 this year, according to the notification.

Source: https://www.thedailystar.net/business/news/bsec-gets-two-new-commissioners-3605216