BANGLADESH’S strategy of borrowing in Japanese yen to avoid paying high dollarbased interest rates has started backfiring due to the currency volatility and rising interest rates in Japan.
The South Asian country has, for instance, ended up losing $13 million to exchange rate differences on a recent $600 million budget support loan from the Asian Development Bank, taken entirely in yen, according to a report in Bangladesh’s Business Standard newspaper.
Last year, too, the government took a $300 million loan for the Bangladesh Second Recovery & Resilience Development Policy in yen. Another $400 million Climate Resilient Inclusive Development Programme loan from the Asian Infrastructure Investment Bank (AIIB) was also denominated in yen.
Similarly, a $100 million portion of a World Bank budget support loan for the Resilient Urban and Territorial Development Project was taken in yen, the report states.