Top lender State Bank of India has asked exporters to avoid settling deals with Bangladesh in the dollar and other major currencies as it looks to curb exposure to Dhaka's falling reserves, according to an internal document and a source.
The new logo of State Bank of India is pictured at the podium of the venue of a news conference after the announcement of SBI's fourth quarter results, in Kolkata, India May 19, 2017. REUTERS/Rupak De Chowdhurihas asked exporters to avoid settling deals with Bangladesh in the dollar and other major currencies as it looks to curb exposure to Dhaka's falling reserves, according to an internal document and a source.
Bangladesh's $416-billion economy is battling rising prices of energy and food as the Russia-Ukraine conflict widens its current account deficit, and dwindling foreign exchange forces it to turn to global lenders such as the International Monetary Fund ."The country is facing a shortage of foreign currency due to higher import bills and weaknesses of Bangladeshi taka against dollar in recent times," the SBI said in an Aug. 24 letter sent to its branches and seen by Reuters.
Finance ministry officials have said Bangladesh is seeking a $4.5 billion loan from the IMF, in excess of its maximum entitlement of $1 billion under the IMF Resilience and Sustainability Trust.A source familiar with the matter said SBI did not want to increase its exposure to Bangladesh. "We have an approximate exposure of $500 million to Bangladesh and have taken the decision not to grow it further aggressively, and maybe, even reduce it as needed, with the news surrounding the economy," added the source, who spoke on condition of anonymity.The island nation of Sri Lanka is grappling with a financial crisis as its central bank reserves stand at just $1.
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