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Bangladeshi garment makers face price cuts after Brexit

British buyers of Bangladeshi garment products have started putting price pressure on manufacturers following the freefall of pound sterling as a result of Brexit. The pound sterling sank as low as $1.35 - its lowest rate against the dollar since September 1985 - before recovering to $1.37. It has also declined sharply in Bangladesh.

June 22, the day before the Brexit, the inter-bank exchange rate of the pound sterling stood at Tk 115.27. The following day it came down to Tk 107.26 and on Monday, it stood at Tk 103.64, meaning the British currency slumped about 10 per cent in the space of five days.

For the UK, a weaker exchange rate means its import bills will swell and so will inflation. But it seems British retailers are not ready to pay more for garments they source from Bangladesh, say exporters. This pressure on price will further affect exporters' margins that have already been squeezed due to a rise in operational and compliance costs, he added.

Analysts believe, the British buyers of Bangladeshi garments will also try to get price benefits out of their devaluating exchange rate. Bangladesh exported goods worth $3.23 billion to the UK in fiscal 2014-15, up 21.28 per cent year-on-year, according to the Export Promotion Bureau (EPB). In the first 11 months of the fiscal year, Bangladesh's export to the UK rose to over $3.4 billion.