The country's central bank, the Bangladesh Bank, said on Thursday that the new buying and selling rates effective from Sunday would be taka 48.35 and taka 48.65 respectively to the dollar. With the devaluation, the dollar has become costlier by 1.40 taka.

The taka continues to remain "one of the most stable currencies in the region" and the new adjustment was necessary to spur growth of exports while retaining its competitive edge, the bank said.

This is the third devaluation this year and the second since July when it was devalued by 80 paise. With this, the Bangladeshi currency has been adjusted 14 times since the government of prime minister Sheikh Hasina Wajed came to power in June 1996, raising the price of a dollar by 6.75 taka.

Hossain Zillur Rahman of the Bangladesh Institute of Development Studies (BIDS) noted that the move would make imports expensive but conceded that it would help exports to someextent. "But it was not clear why the government went for devaluation. There have been no compelling grounds or reasons for such a massive adjustment," he said.

But business leader Yusuf Abdullah Harun, outgoing president of the Federation of Chambers of Commerce and Industry (FCCI), defended the move. "It was inevitable. The taka was overpriced vis-a-vis our neighbouring currencies. The adjustment would make exports competitive," he said.

However, he cautioned against inflation. "We have to see what steps had been taken by the government to offset negative impacts like inflationary pressure on the economy," he said.

Money market reports said the taka became firm against the greenback in inter-bank trading on Thursday with adequate supply of dollars in the wake of decreased foodgrain imports.

Dealers said that inter-bank call money rates fell on Thursday to 7.5-8.5 per cent against the closing level of 9-10 per cent.

Another report said the country's overall exports in the first two months of thecurrent fiscal have experienced an upward trend against the corresponding period of the previous year despite the devastating floods. This was disclosed at a review meeting on overall exports of the country. The meeting was informed that the total export during July-August was worth $944.28 million compared with $921.87 million for the corresponding period last year.