Political instability and its adverse impact on the economy of Bangladesh: Insights from eminent economist Ahsan Mansoor

Bangladesh Bank’s steps to improve reserve position fail

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Strict steps will have to be taken to increase the reserves. The value of the dollar will have to be left to the market after the election because there is no time to do so before the election. The central bank will have to raise interest rates a little more before releasing the dollar rate to the market.

The policy interest rate has been increased a few days ago, but some further increase is needed. This has to be done so that the supply of money in the market reduces. If the interest is increased, demand will decrease and Taka will become attractive as a currency, which means the value of Taka will increase.

Besides, government expenditure will also have to be reduced. Some steps have been suggested to reduce public expenditure. The issue of reduction in public expenditure has to be addressed so that loans are not taken by printing taka when revenue collection falls. Currency and revenue policy will have to be made stringent.

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