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Remittance to keep taka strong

Times Business Report - March 18th, 2013

The taka will continue to strengthen this year against the dollar on the back of a moderate trade deficit and robust remittance growth, HSBC said in a recent study.
The current account surplus, the key driver of balance of payments, has widened in the last six months thanks to 20 percent growth in remittance, according to the study on the Asian frontier markets of Vietnam, Sri Lanka and Bangladesh.
One factor supporting the ongoing rise in remittance, according to HSBC, is the strength of the economies where most overseas Bangladeshi workers are based.
More than 60 percent of remittance flows come from the Gulf nations, whose economies, according to a recent study by the World Bank, are expected to go from strength-to-strength during 2013-15.
Trade balance, the other major component of the current account, remains in deficit, and is expected to slightly widen due to major exposure to the Eurozone and the US, which account for almost 67 percent of the country’s export.
Political uncertainty arising from elections and non-food inflation, however, pose challenges to the sustainable appreciation of the currency, the report noted.