Impact of the Exchange Rate Regime Change on the Value of Bangladesh Currency

Asad Priyo

MPRA Paper from University Library of Munich, Germany

Abstract: Two distinctively different exchange rate regimes have been in place in Bangladesh – a fixed exchange rate regime from January 1972 – May 2003 and a floating exchange rate regime since June 2003. Since the change in regime, the value of Bangladesh currency ‘Taka’ has fallen by more than 20% against the US Dollar during a period when the US Dollar itself has been losing value. The objective of this paper is to analyze whether the exchange rate regime change in Bangladesh has had any significant impact on the value of its currency i.e. whether the regime change is associated with the loss in the value of Taka. The fact that during the fixed regime, Bangladesh pursued an active exchange rate policy as reflected by the policies of Bangladesh Bank during that period is what makes the question worth asking. In one way, this paper tests the efficiency of Bangladesh Bank in terms of pricing its currency during the fixed regime. In the process, the paper also tries to identify the variables that play important roles in determining the exchange rate of Taka. In order to provide context; the exchange rate system in Bangladesh – its past, its present; the causes of the change in the system and a comparative analysis of the systems have been briefly discussed.

Keywords: Value of Taka; exchange rate regime; fixed exchange rate; floating exchange rate (search for similar items in EconPapers)
JEL-codes: F31 F39 (search for similar items in EconPapers)
Date: 2009-04-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Social Science Review 1.26(2009): pp. 185-214

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/117987/1/Impact%20 ... ka%27%20-%20MPRA.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:117987

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().