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Tag: import costs

  • Bangladesh Taka Strengthens Against US Dollar After 5.5 Years

    Bangladesh Taka Strengthens Against US Dollar After 5.5 Years

    The Bangladeshi taka has strengthened against the US dollar, ending a continuous depreciation trend spanning five and a half years, according to a report from Bangladesh Bank.

    Between August 30 and September 17 this year, the local currency appreciated by 0.77 percent against the greenback as the dollar rate dropped from a record high of Tk 123.95 to Tk 123.00.

    On a point-to-point basis from June last year to June this year, the taka gained 0.06 percent, reversing an unbroken slide from 2021 that had devalued the currency by 45.05 percent.

    Reversing a Five-Year Downward Spiral

    Dhaka saw its first sustained currency recovery since late 2020. That year, lower pandemic import bills and solid remittances allowed the taka to firm slightly to Tk 84.80.

    Import pressures resumed in 2021, pushing the dollar to Tk 85.80 by year-end. Post-pandemic commodity shocks and the war in Ukraine accelerated the slide in 2022, lifting the dollar rate 23.37 percent to Tk 105.85. The taka fell further to Tk 110.00 in 2023, Tk 120.00 in 2024, and Tk 122.33 by December 2025.

    Over the five-year span, the greenback climbed by Tk 38.20. That loss squeezed corporate margins across manufacturing hubs. It also inflated domestic retail prices on consumer staples.

    Divergence from Regional Currencies

    Trends across South and East Asia diverged from Bangladesh during the same period. Between June 2025 and June 2026, the South Korean won dropped around 11 percent against the greenback. The Sri Lankan rupee shed more than 10 percent.

    India’s rupee weakened by nearly 9.5 percent over the 12-month period, while the Indonesian rupiah lost about 9 percent. Modest gains appeared elsewhere. Both the Malaysian ringgit and Chinese yuan gained nearly 4 percent, and the Pakistani rupee firmed by about 2 percent.

    These divergent currency paths reshape cross-border sourcing costs for regional retailers and consumer goods manufacturers. Retailers buying finished goods and packaged foods from India face lower dollar procurement costs. Meanwhile, Bangladeshi factories buying dollar-denominated raw materials gain immediate relief on input invoices.

    Relief for Importers and Retail Supply Chains

    Lower landed import bills directly benefit buyers of refined fuel, edible oils, industrial chemicals, and wheat. Importers spent the past three years absorbing double-digit depreciation that pushed landed costs to records.

    Steady foreign exchange pricing removes the immediate need for emergency shelf-price increases at retail. Lower import costs ease pressure on household purchasing power. That buying power had contracted under cumulative double-digit retail inflation.

    Local-currency balance sheet losses will narrow for domestic conglomerates holding dollar-denominated commercial debt. Servicing foreign loans grew far more expensive as the dollar climbed from Tk 85 to nearly Tk 124 over five years.

    Trade Balance and Reserve Targets Ahead

    Maintaining currency stability now rests on managing import demand and keeping remittances flowing through official channels. Bangladesh Bank has relied on targeted dollar purchases to rebuild gross reserves. It avoided defending fixed pegs through emergency dollar sales.

    Corporate treasurers and retail supply directors are tracking import volumes heading into the final quarter. Any surge in capital goods orders or energy demand will test the central bank’s ability to hold the exchange rate near Tk 123.

  • Japan Core Inflation Holds at 1.7% as Central Bank Prepares Rate Increase

    Japan Core Inflation Holds at 1.7% as Central Bank Prepares Rate Increase

    Japan’s core consumer price index rose 1.7 per cent year-on-year in August, holding steady near the central bank target ahead of an expected policy rate hike to 1.25 per cent.

    The reading slipped from a 1.8 per cent gain in July and came in just below the median market forecast of 1.8 per cent. Stripping out both fresh food and fuel, the narrower core-core index tracked by policymakers climbed 1.9 per cent from a year earlier, pointing to steady domestic price momentum across goods and consumer services.

    Subsidies mask underlying price growth

    Core inflation remained below the Bank of Japan’s 2 per cent threshold for an eighth straight month. State utility subsidies cushioned household electricity and gas bills, neutralizing broad price increases applied across shelf goods, processed foods and consumer durables.

    Without government intervention on utility tariffs, headline consumer pricing would sit well above current readings. Manufacturers and supermarket operators continue to pass higher raw material and transport expenses onto retail shoppers.

    Currency pressure hits import bills

    A weak yen and rising shipping expenses tied to Middle East supply disruptions have pushed import costs higher for consumer brands. The central bank warned that sustained currency weakness creates risks of an inflation overshoot if overseas procurement costs stay elevated through the second half of the year.

    Importers and specialty retailers face shrinking gross margins unless they adjust shelf prices further. Higher procurement expenses leave retail operators little room to absorb future currency depreciation without passing costs directly to consumers.

    Borrowing costs squeeze retail margins

    For commercial operators and property groups, higher borrowing costs will raise debt servicing expenses on store fit-outs, logistics infrastructure and warehouse expansions. Department store operators and retail real estate developers that relied on ultra-low funding to carry inventory and upgrade flagships face tighter capital discipline.

    Consumer finance and retail credit providers will see immediate interest rate repricing. While higher rates improve returns for retail banks, elevated borrowing expenses risk dampening discretionary spending on electronics, fashion and lifestyle goods across metropolitan centers.

    Projected trajectory through 2027

    The Bank of Japan lifted its benchmark rate to 1 per cent in June after assessing that durable inflation had taken hold across the domestic market. Policymakers kept rates unchanged in July while preparing markets for further tightening if underlying price trends remain elevated.

    Financial markets anticipate policy rates will climb to 1.5 per cent by the end of March next year, before reaching 1.75 per cent in the second quarter of 2027.