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Bangladesh banks feel squeeze of Moody's outlook downgrade

Sector faces higher costs, pressure for reform as economic worries mount

Bangladeshi banks are already dealing with a shortage of dollars, and industry experts say the outlook downgrade will further hinder cross-border transactions.    © Getty Images

DHAKA -- Bangladesh's banking sector is girding for a rougher ride after Moody's, one of the big three global rating agencies, downgraded its outlook for the sector from "stable" to "negative."

Economists and financial analysts say last week's downgrade is a major blow for an economy hobbled by a weakened currency, high inflation and declining foreign reserves amid the global shock waves from the Ukraine war. They warn that cross-border financial transactions will become more difficult and costly for the import-dependent South Asian nation. Some overseas institutions have already curtailed credit limits for Bangladeshi banks, according to sources.

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