Bangladesh yen gamble turns sour as costs soar
Bangladesh faces mounting financial losses from its attempt to sidestep expensive dollar loans by borrowing in Japanese yen instead. Currency swings and climbing rates in Japan have turned the approach into a costly gamble for the South Asian nation. A recent 600 million dollar budget support loan from the Asian Development Bank resulted in 13 million dollars lost to exchange rate shifts because the full amount was denominated in yen.
The yen strengthened roughly 7 percent versus the dollar during a single month while Japanese interest rates continue their upward climb. This pattern increases the actual expense of settling yen loans for Bangladesh, which holds reserves primarily in dollars. The Chattogram Water Supply Improvement Project illustrates these dangers sharply. Officials split the 280 million dollar World Bank loan evenly between dollars and yen, but the Chattogram Water and Sewerage Authority must handle more than 23 million dollars in yearly debt payments for six years. Managing Director Muhammad Anwar Pasha noted that higher authorities determine foreign borrowing choices and easing repayment strain requires government action.
Data from the Economic Relations Division shows the yen loan total reached nearly 12 billion dollars by the end of June 2024, rising from 7.52 billion dollars four years prior. Finance Division officials warn that exchange rate swings create fresh problems absent any formal guidelines for non-dollar borrowing.
