Bangladesh Taka (BDT) and US Dollar (USD)
It has been more than 35 years since Bangladesh has a currency of their own, yet throughout these 35 years, it is noted that the Bangladeshi Taka (BDT) has been on a decline against major currencies around the world, including the US Dollar.
Currently, 1 US Dollar trades at about 68.88 Bangladeshi Taka, or 1 Bangladeshi Taka compared against 0.0145 USD. While this rate is still higher compared to its neighbour Pakistan, there is little indication if the Bangladeshi may appreciate against the US Dollar in the long term.
The value of the Bangladeshi Taka is often affected by the remittance of US Dollar by Bangladeshis working overseas. Many Bangladeshis work overseas as maids, construction workers and other similar low paying jobs, but earning salary still much higher than if they would had earned in Bangladesh. While there could be hardship, most Bangladeshi are able to endure the time away from home as they will usually head home once they have saved up enough after about 5-10 years, enough for them to setup their own businesses or if they are lucky enough, to retire. In the meantime, the money they remit back (in US Dollar or other currencies) means that there is a stable demand for the Bangladeshi Taka, preventing the value of the Bangladeshi from sliding.
One key trend that can potentially reverse the depreciation of the Bangladeshi Taka is to increase the remittance amount by their overseas citizens. This can be increased not by having more citizens working overseas, but by having citizens working overseas remitting more money home. This will require their citizens to be better skilled so as to be higher paid. For example, a Bangladeshi labourer working in the United States may earn US$400/month. If the same Bangladeshi works as a teacher instead and draws US$4,000/month, this will increase the remittance amount 10-fold (assuming he remits 10 times the original amount back home). And if this can happen, it is possible that the Bangladeshi Taka (BDT) can eventually reverse their decliing trading trend and stabilise to 1 US Dollar = 40.0 Bangladeshi Taka.
Note that the daily trade volume of the USD/BDT is about US$13.0 million. This is a low figure, considering the number of Bangladeshis currently working overseas.
The government of Bangladesh needs to recognise the importance of education to their currency and wealth, and it is prudent that efforts are expedited for this to happen, as educational policies requires at least 1 decade for the results to materialise.
I had did a study many years back and found that not many people would trade Bangladesh Taka and US Dollar pair.
Any reason why? Afterall, there are a lot of foreign workers from Bangladesh in the US.
Afterall, you are still taking about Exchange Rate from both countries – it does not comprises just people working in the US but also traders who buy/sell Bangladesh products.
Hi,
I will like to add on. Not only Bangladeshis trade in the Taka.
I do trade as well, including other major currencies around the world – whichever trading pair has the most potential movements.
Regards,
FG
The taka is well traded still, compared against the SOM.