Exchange Rate Responses to Inflation in Bangladesh

October 1, 2002

Preview Citation

Format: Chicago

Akhtar Akhtar Hossain. Exchange Rate Responses to Inflation in Bangladesh, (USA: International Monetary Fund, 2002) accessed December 24, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the exchange rate responses to inflation in Bangladesh during the period from 1972-73 to 1999. Both annual and monthly data are used in the investigation. The results suggest that past consumer price inflation generally led to currency devaluation, measured as a decline in the value of the currency in terms of the trade-weighted nominal effective exchange rate. The effect of inflation on devaluation, however, became weaker following the financial reforms undertaken in the early 1980s. The effect of devaluation on inflation was not significant, and this result remained robust throughout the sample period.

Subject: Exchange rate arrangements, Exchange rates, Inflation, Monetary base, Real exchange rates

Keywords: Price level, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/166
Stock No:

WPIEA1662002
ISBN:

9781451858112
ISSN:

1018-5941

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