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The planetary constellations of India’s neighboring countries are not doing well. First Sri Lanka went bankrupt, then in 2023 the signs of Pakistan’s economy collapsing are clearly visible, while now India’s eastern neighbor Bangladesh is also facing a deepening crisis. In fact, the international rating agency Moody’s has downgraded the ratings of the banks of Bangladesh, due to which there has been an earthquake in the banking sector there. Moody’s has downgraded the rating of Bangladesh’s banking sector to negative from stable. Due to this, the banks there will face difficulties in getting investment.
According to economists, this decision of Moody’s is as bad news for the banking sector as it is for the economy. The value of Bangladesh currency is continuously decreasing, while inflation is at its peak. Apart from this, the foreign exchange reserves of the country are continuously decreasing.
Economists have pointed out that cross-border financial transactions will become more difficult after Moody’s latest assessment. Some foreign institutions have even decided to reduce the credit limit of Bangladeshi banks.
Despite the dollar crisis, many of our banks were still able to do transactions with foreign banks. This was happening because of long term relationship and trust. But now the entire banking sector of Bangladesh has been termed as risky. This will definitely cause problems in cross-border transactions.
Bangladesh now has less than $32 billion in foreign exchange reserves. The forex reserves stood at $48 billion in August 2021. Meanwhile, Bangladesh’s currency Taka has declined by 27 per cent in the last six months against the dollar. Now the price of one dollar has reached 107 taka. Meanwhile, the International Monetary Fund has also expressed concern over the rising NPAs of banks and has asked the government to improve the banking sector regulations and monitoring system.
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