Shawdesh desk:

Bangladesh’s export income is likely to be affected by the increasing dominance of the US dollar over the Euro, forcing the European buyers to devalue their orders to cope with the recession, economists and exporters have said.

A unit of US dollar was equal to 0.99 Euro on Wednesday, according to the international exchange rate platform xe.com.

The dominance of the US dollar and the parity of the two rival currencies after nearly two decades may affect Bangladesh’s economy, which mostly depends on European countries for readymade garment exports.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Shahidullah Azim said the parity may affect the country’s export earnings as the buyers in Europe have reduced their orders to adjust to the devaluation of their currency.

“Since the Ukraine war began, the adaptation of fashion items has declined globally. The volume of orders from foreign buyers dropped significantly. With the devaluation of the Euro, the buyers will also reconsider the value of imported products,” Shahidullah Azim told the Daily Sun.

He also fears a drop in revenue by the third quarter of this year due to the devaluation Euro.

Bangladesh earned $23.23 billion from its exports to the EU region in FY 2021-22.

Policy Research Institute (PRI) Executive Director Ahsan H Mansur said the stronghold of the dollar in Europe and elsewhere in the world will increase Bangladesh’s import cost.

“Our exporters pay in US dollars. However, European buyers evaluate the value of products in Euro. So, the devaluation of the Euro will reduce the earnings from the region ultimately. Besides, the European countries have been going through a recession since the beginning of the Ukraine war,” Dr Mansur, also the chairman of BRAC Bank, told the Daily Sun.

The economist also suggested reducing imports from European countries to avoid a possible hike in food inflation in near future.

The exchange rate between the euro and the US dollar reached parity in the international market on Tuesday as the two currencies are worth the same for the first time in 20 years, according to CNN.

After the devaluation of the Euro, CNN fears of the recession in Europe abound, stoked by high inflation and energy supply uncertainty caused by Russia’s invasion of Ukraine.

The European Union, which received roughly 40 per cent of its gas through Russian pipelines before the war, is attempting to reduce its dependence on Russian oil and gas.