Bangladesh Firms Brace for Higher Interest Burden Amid US Rate Hike
The US Federal Reserve's recent rate hike has raised concerns about financing costs and profitability for local listed companies in Bangladesh that have substantial foreign-currency debt.
Dr. Fahmida Khatun, a distinguished fellow at the Centre for Policy Dialogue, warned that companies with variable-rate or dollar-denominated loans may face higher interest payments following the US rate increase.
The Bangladeshi taka's depreciation could further exacerbate the situation, as borrowers would need more local currency to repay each dollar of debt, increasing their repayment burden.
Power Grid Company, a state-run entity with significant foreign-loan exposure, is particularly sensitive to a combination of higher benchmark rates and possible taka depreciation. The company has reported losses of nearly Tk 13 billion in the past three financial years due to additional costs from foreign-currency loans and foreign-exchange losses.