Exchange Rate Policy under Floating Regime in Bangladesh: An Assessment and Strategic Policy Options
AbstractThis paper examines the exchange rate policy in Bangladesh for the period 2000-08. Regime classification of the paper suggests that Bangladesh maintained a de facto managed floating regime by intervening in the foreign exchange market on a regular basis. This is at odds with the Bangladesh Bank's claim of maintaining de jure floating regimesince end-May 2003. A high exchange rate pass-through is observed along with high market pressure during the period of expansionary monetary policy. Given the thin foreign exchange market and high pass-through effects, it appears difficult for Bangladesh to mainatin a freely floating regime. Although Bangladesh maintained average competitiveness, the currency remained somewhat overvalued. Based on the findings, some pragmatic policies in managing the exchange rate in Bnagladesh have been suggested.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 20487.
Date of creation: Oct 2009
Date of revision:
Publication status: Published in Bangladesh Development Studies No. 4.Vol. X(2009): pp. 35-67
Exchange Rate; Floating Regime; Bangladesh;
Find related papers by JEL classification:
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-21 (All new papers)
- NEP-IFN-2010-08-21 (International Finance)
- NEP-MON-2010-08-21 (Monetary Economics)
- NEP-OPM-2010-08-21 (Open Economy Macroeconomic)
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