Bangladesh Firms Fear Rate Hike Fallout Amid Soaring Dollar Debt

The US Federal Reserve raised its policy rate by 25 basis points to 3.75-4 percent from 3.5-3.75 percent on Wednesday, causing concern about financing costs for local listed companies with substantial foreign-currency debt.

According to Dr Fahmida Khatun, a distinguished fellow at the Centre for Policy Dialogue (CPD), companies with variable-rate or dollar-denominated loans could face higher interest payments following the US rate increase.

The dollar's reference rate was Tk 123 on Sunday, while daily market rates fluctuate. A further depreciation of the taka would increase the taka value of outstanding dollar debts even if the underlying dollar interest rate remains unchanged.

Power Grid Company has one of the largest foreign-loan exposures, with foreign loans standing at Tk 584 billion as of March this year. The company's own disclosure highlights the potential earnings impact of foreign-currency borrowing.