Published in The Daily Star on Wednesday, 25 February 2015.
Garment exporters hit by euro slide
Refayet Ullah Mirdha
The steep fall of the euro along with political crisis at home has dealt a twofold setback to garment exporters, who are losing money both ways.
“It’s a double whammy for us,” said Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association.
“On one hand, we are losing business for the ongoing political impasse inside the country and on the other hand, we are losing money due to currency devaluation in our main market.” The eurozone is the largest export destination for Bangladesh, with 60 percent, or more than $14 billion, of garment items being shipped to the region every year.
The taka is getting stronger against the euro and the dollar, he said. The euro has been sliding in recent times for the financial crisis in Greece, a member of the EU.
For instance, in September last year, each euro traded for Tk 110, but now it is trading at Tk 87, which is almost a 21 percent decline in value.
With the recent devaluation of the euro, the exporters are receiving less after currency conversion for the goods they shipped a few months ago, said Mustafizur Rahman, executive director of Centre for Policy Dialogue.
Bangladesh needs to look whether the exchange rates of the currencies of some other competing countries like Vietnam, Pakistan and Cambodia are also falling equivalent to Bangladesh or not, he said.
If the euro also falls against the currencies of the competing countries, Bangladesh will remain competitive in the same market; if not, Bangladesh will lose competitiveness, the CPD executive director added.
Meanwhile, Islam said the garment sector has already been facing challenges for the ongoing political crisis, which is now in its seventh week.
The retailers are either cutting work orders or diverting them elsewhere due to the crisis. The garment makers are facing troubles in transportation of goods from the factories to the port and from the port to the factories for the crisis.