The country’s knitwear exporters yesterday urged the central bank to act cautiously in its attempts to strengthen the taka against the dollar, as a stronger taka could hit exports.

“The central bank should take into account the sectors that earn foreign currency when it intervenes in the money market,” said Fazlul Haque, president of Bangladesh Knitwear Manufactures and Exporters Association (BKMEA), at a press conference in Dhaka.

In recent days Bangladesh Bank has intervened in the currency market to rein in the growing inflationary pressure by selling $109 million in the inter-bank system in an attempt to strengthen taka. The dollar price stood at Tk 69.25 yesterday.

By selling dollars and buying taka the bank increases demand for the local currency, a move that should push up its value.

Haque said he did not oppose the existing system of reducing the dollar price, but said that the “dollar price should be fixed by the market, not by the direct intervention of central bank.”

Commenting on the recent decline in knitwear exports Haque said he is not worried. He said the Utilisation Declaration (UD) reported by producers in the knitwear sector has increased significantly since August and this means exports from the sector will go up. The UD tracks the amount of raw materials being used in the sector.

According to the BKMEA, UD rose by 10 percent in August, 40 percent in September and 18 percent in October compared to corresponding periods last year.

Knitwear exports fell by 12 percent in the July-August period of the current fiscal compared to the same period of the previous fiscal year. The decline is attributed mainly to the political heartbreak in the country during the last few months of 2006.

“Although the export target for the knitwear sector set for the current fiscal is ambitious, if the growth rate continues we can reach the target,” BKMEA president said.

The export target for the knitwear sector for the current fiscal year is set at $5.4billion.

The BKMEA president said despite an acute political unrest between October, 2006 and January, 2007, Bangladesh’s position in the global market is still good.

“If we want to increase our market share globally, the government should go for a massive image building campaign across the world,” he said, adding that the activities of Bangladeshi missions abroad should be more ‘proactive’.