EVOLUTION OF EXCHANGE RATE REGIME: IMPACT ON MACRO ECONOMY OF BANGLADESH by Liza Fahmida A mission submitted in partial success of the necessities for the diploma of Skilled Grasp in Banking and Finance Examination Committee: Dr. Sundar Venkatesh (Chairperson) Dr. Juthathip Jongwanich Dr. Yuosre Badir Nationality: Bangladeshi Earlier Diploma: Grasp in Finance and Banking College of Dhaka Bangladesh Scholarship Donor: Bangladesh Financial institution Asian Institute of Know-how Faculty of Administration Thailand Could 2012 ACKNOWLEDGEMENT The dissertation paper entitled “Evolution Of Alternate Fee Regime: Affect On Macro Economic system Of Bangladesh” has been ready for the partial success of Skilled grasp in Banking and Finance (PMBF) program carried out by Faculty of Administration, AIT, Thailand. I wish to supply my wholehearted gratitude and respect to an excellent quantity of people that supplied encouragement, information and data, inspiration and help throughout the course of setting up this dissertation paper.
It might be tough to organize the paper and to current it in a lucid method inside stipulated time with out the assistance of my information instructor Dr. Sundar Venkatesh, Adjunct College, Faculty of Administration, Asian Institute of Know-how, Thailand. His utmost care, fixed assist and meticulous supervision guided me by way of the method. I’m indebted to Begum Sultana Razia, Normal Supervisor, Financial Coverage Division, Bangladesh Financial institution, whose honest co-operation and worthwhile recommendation assist me to organize this paper.
I wish to thank all of my colleagues and different staff of Overseas Alternate Coverage Division and Financial Coverage Division, Bangladesh Financial institution for his or her help on this regard. I wish to thank all of fellow course mates who contributed by way of their feedback and strategies to organize the report in a complete method. ii ABSTRACT Bangladesh had two totally different change fee regimes- a hard and fast change fee system from January 1972-Could 2003 and a floating change fee regime since June 2003. After adopting the floating change fee regime Bangladesh skilled optimistic impacts on macro financial growth.
The variables of the macroeconomic elements have been thought of as overseas reserve, staff’ remittances and export proceeds to judge the affect of change fee over them on this paper. However the ongoing challenges for the nation are the depreciating pattern in native foreign money in a extremely inflationary financial system. The target of the paper is to judge the macroeconomic efficiency over the regimes and to investigate current foreign money scenario of Bangladesh. iii Desk of Content material NO. 01 Title web page Acknowledgement Summary Desk of contents Listing of Figures Listing of Abbreviations Chapter-01 02 1. 1 Rationale 1. Scope 1. Three Targets of the research 1. Four Methodology 1. 5 Limitations 1. 6 Group 02 Chapter-02 Literature Evaluation 03 Introduction Three. 1 Elements Affecting Alternate Fee Three. 2 Efficiency of earlier and present FX-Regime in Bangladesh fee of GDP Three. 2. 1 Progress Unde Three. 2. 2 Present Account Steadiness Three. 2. Three Inflation State of affairs Three. Three Justification of Floating Alternate Fee Three. Four The Transition from Mounted to Float 04 Chapter-04 Efficiency of Floating Alternate Fee System On Macro Economic system of Bangladesh Four. 1 The Export On Macro Economic system of Bangladesh State of affairs Four. 2 Enhancement of Employees Remittance Four. Reserve Place Four. Four The Progress Fee of GDP 13 14 14 15 7 Eight Eight Eight 9 10 10 Chapter-03 Alternate Fee Evolution in Bangladesh 7 Introduction 1 1 1 2 2 2 Three Three SECTION Web page I ii iii iv V vi iv Four. 5 Relationship amongst variables 05 Chapter 5 Preset Alternate Fee State of affairs Preset Alternate Fee State of affairs 5. 1 Alternate Fee Motion 5. 2 Causes for Foreign money Depreciation 5. 2. 1 Excessive Inflation 5. 2. 2 Low Overseas Direct Funding 5. 2. Three Commerce Deficit Chapter 6 06 Advice and Conclusion 6. 1. Management Inflation 6. 2. Cut back Commerce Deficit 6. Three Enhancing Overseas Direct Funding 6. Three Efficient Capital Market 6. Quick Time period Overseas Borrowings 6. 5 Efficient Capital Market 6. 6 Derivatives Market 6. 7 Formation of Home FX Market 6. Eight Autonomy of the Central Financial institution 07 08 References Appendix Commerce Deficit of Bangladesh Yearly Reserve Place Yearly information of Employees Remittance Yearly information of Inflation Yearly information of Export, Remittance, Reserve and Exchanger Fee Month-to-month information of Remittance and Alternate Rat Regression Evaluation FDI In Bangladesh 16 17 17 17 18 18 19 21 21 21 21 21 21 21 22 22 22 23 24 25 26 27 28 29 30 31 v LIST OF FIGURES TITLE Three. Four Three. 5 Four. 1 Four. 2 Four. Three Four. Four 5. 1 5. 2 5. Three 5. Alternate Fee Motion instantly after inception of Floating Comparability of month finish Actual Efficient Alternate Fee The Export Quantity in US$ The Employees Remittance The Overseas Reserve Place (REER) and Nominal Alternate Bangladesh GDP Progress Fee Fee between 2003-2004. Alternate Fee Motion Determine: Inflation Progress Fee of Overseas Direct Funding Commerce Deficit of Bangladesh PAGE 11 11 13 14 15 16 17 18 19 20 vi LIST OF ABBREVIATIONS AD ADB BB FDI FPI FX FY GDP IMF LC Approved Sellers Asian Improvement Financial institution Bangladesh Financial institution Overseas Direct Funding Overseas Portfolio Funding Overseas Alternate Monetary 12 months
Gross Home Product Worldwide Financial Fund Letter of Credit score NEER OANDA REER USD Web Efficient Alternate Fee Web site of change charges data. Actual Efficient Alternate Fee Us Greenback vii Chapter 1 INTRODUCTION On the preamble of the Bangladesh Financial institution order, 1972, it’s said that “Whereas it’s needed to determine a central financial institution in Bangladesh to handle the financial and credit score system of Bangladesh with a view to stabilizing home financial worth and sustaining a aggressive exterior par worth of the Bangladesh Taka towards fostering progress and growth of nation’s productive assets within the nationwide curiosity. To keep up a aggressive exterior par worth of the Bangladesh Taka, as per Overseas Alternate Regulation Act, 1947, Bangladesh Financial institution as a central financial institution of the nation, regulates the overseas change on behalf of the federal government 1. 1 Rationale: Alternate fee signifies the worldwide place of financial system of the nation. The nation’s financial growth is carefully associated with it’s overseas change system. Overseas change fee is an important element for the nation’s financial actions too. Bangladesh has been skilled the floating change fee regime since Could 2003 and handed plenty of Pons and cons within the total financial system.
Because of the utmost significance of the change fee within the financial system, the research has been carried out on this space. 1. 2 Scope: This paper covers the comparability of the fastened and floating change regime of Bangladesh. The important thing issue of this paper is the analysis of the affect of change fee on the basic macroeconomic indicators of the financial system. Three primary basic elements have been recognized to measure their affect with change fee. These are export, staff remittance and overseas change reserve. The empirical information of 2000 to 2012 has been used to ustify the entire thing. To get an concept in regards to the Bangladesh’s place, some neighboring nation’s expertise additionally been in contrast right here. 1. 2 Targets of the research 1. To judge the change fee regimes in Bangladesh financial system: Mounted and Floating 2 To judge the floating association’s efficiency in three macro financial variables: Export, Employees Remittance and Overseas Reserve. Three To grasp the rationale for foreign money depreciation 1 1. Four Methodology To acquire the aims of the research, secondary information have collected.
The sources of knowledge are Bangladesh Financial institution, Board of Funding, Export Promotion Bureau, Web sites of IMF, ADB, OANDA and different associated hyperlinks. Statistical evaluation correlation has been calculated to grasp the change fee’s significance on the financial variables of Export, Employees Remittance and Overseas Reserve . 1. 5. Limitations There have been some limitations to conduct the research. Being, delicate, new one, issues had been confronted to narrate with numerous parts and linking with them. And for its very nature, major information was not out there.
Because the change fee regime is an enormous space, it was additionally difficult to organize this report inside a restricted time. 1. 6. Group There are six chapters on this report. Chapter I is the introduction that divided into six sub sections. Literature Evaluation is in Chapter 2. Alternate Fee Analysis in Bangladesh has been lined in Chapter Three. Chapter Four covers Efficiency of Floating Alternate Fee System On Macro Economic system of Bangladesh. Current change fee scenario is describing in Chapter 5. The final chapter covers suggestion and conclusion. 2
Chapter 2 LITERATURE REVIEW The essential coverage variables of nation is overseas change fee that ensured commerce, enterprise, long run funding, overseas direct funding, inflation, overseas change reserve, inward remittance and so on. Varied economists opined that the coverage of the change fee system had a vital affect on 1990’s financial disaster. Nonetheless, it’s but to be proved both theoretically or empirically concerning the position of change fee on the symptoms of macroeconomic variables. Regardless of the case could also be, totally different nations undertake totally different change fee insurance policies.
Bangladesh, the main target of this paper, had a hard and fast change fee system in place since January, Three 1972. After greater than 31 years, the Central Financial institution of Bangladesh (Bangladesh Financial institution) modified it right into a floating change fee system in June 2003. Bangladesh has been pursuing a floating change fee system since then. Dr. Mirza Azizul Islam, the previous advisor, Ministry of Finance of the Caretaker Authorities of Bangladesh, offered a paper in January 2003, proper earlier than the shift from fastened to floating regime, explaining the general efficiency of the fastened regime and the possible implications of the floating regime on Bangladesh financial system.
He steered that the experiences of different nations within the area present that floating regime generates better volatility in change charges and this kind of uncertainty is more likely to have an effect on adversely the general commerce and funding local weather which is already bothered by many unfavorable parts in Bangladesh (See Islam, 2003). Bangladesh pursued a ‘fastened change fee’ regime upto 1979. After that, from 1979 to mid-2003, it adopted a managed floating change fee system.
Repeated melancholy of the house cash, for sustaining a gradual actual change fee in addition to holding away from overvaluation of the native taka, had been the prime elements for taking new system of the overseas change system. From Could, 2003, Bangladesh took nearly a brand new coverage often known as ‘clear floating’ change fee coverage by creating totally convertible present account. However capital account convertibility just isn’t but completed. The principle causes for all of the insurance policies that Bangladesh took had been due to enhance export scenario, lower import legal responsibility with the goal of enhancing steadiness of commerce.
The evidences in favor of the above talked about opinion have been positioned under. Islam( 2003) advised that the regulators of the financial coverage decides the change fee coverage of the nation with the intention to receive two fundamental targets. The primary one is “home goal” that covers stopping inflation fee of inflation, the expansion of credit score each in Authorities and Non-public ranges, and likewise the expansion in liquidity and M2. The second purpose is “exterior goal” which considers overseas change reserve hike, declining present account steadiness, forestall change fee volatility within the nation’s nterbank overseas change market in addition to steadiness the change fee circulate with neighboring nations like India, Bhutan, Sri Lanka, Pakistan and so on. Hossain (2005) referreing Rahman and Bayes that Bangladesh took floating change fee system on account of: (i) international competitiveness; (ii) enhance export dimensions ;(iii) eradicate subsidy from export; (iv) cut back import stress; (v) improve the substitutes merchandise for export. Aziz (2003) confirmed that in line with the statements of the finance ministers for Three ast many years, the prime causes of devaluation of taka in our nation (i) rise in export;(ii) cut back import;(iii) enhance native new child industries; (iv) promote the inward remittances trough pursue wage earners, and (v) improve overseas change reserve. As per the “Monetary Sector Evaluation(2006)’ of the central financial institution of the nation, the foremost causes of change fee coverage covers: (i) export promotion; (ii) encourage inward remittances;(iii) holding the worth stage secure, and (iv) protect a variable account scenario externally.
Because of this, all of the publications and write-ups have illustrated each immediately or not directly the export-growth and import discount as the important thing causes of the change fee coverage of the nation. Previous to adopting floating change fee regime, Islam (2003) argued that the financial and institutional stipulations of a floating change fee regime will not be met in Bangladesh. Some latest research have tried to clarify the conduct of nominal change charges of Bangladesh after its transition to the floating fee regime.
By doing a correlation evaluation, Rahman and Barua (2006) discover the doable rationalization of the change fee motion. They discovered that there’s a robust correlation (-Zero. 40) between depreciation and export-import hole as a share of reserves; L/C openings for imports even have a optimistic correlation (Zero. 45) with volatility of the change fee, which suggests that the upper the L/C openings the extra unstable is the change fee.
They conclude that prime seasonal demand for overseas foreign money due to elevated import payments, systematic withdrawal of extra liquidity by Bangladesh Financial institution, comparatively quicker enlargement of credit score and better rates of interest on numerous nationwide financial savings devices are the explanations behind the rate of interest hike within the cash market and depreciation of the nominal change fee. William Miles, 2006 mentioned in regards to the impact of change fee system (each fastened and floating) on the long run progress within the financial system.
The impact of fastened fee, pegged fee and floating fee has been mentioned right here briefly on the premise of a number of literature evaluations and the discovering is that fastened and intermediate regimes have a transparent, considerably unfavourable affect on progress (holds just for rising markets not for industrial nations. ) On this paper, the writer has given an strategy to find out if change fee regime itself actually extracts an unbiased impact on progress.
Outcomes right here point out that the impact of fastened change charges on progress in rising markets just isn’t direct, however slightly contingent on the existence of macroeconomic imbalances and different distortions in place within the home financial system. These outcomes appear to adapt extra carefully with change fee concept, which posits principally optimistic, and few unfavourable channels for pegged currencies to affect progress over the long term. Asad Karim Khan, June 2009 examines whether or not the floating change fee regime has any affect on the worth of Bangladesh taka i,e does it make any lose on the worth of the foreign money.
He reveals that regime change has no statistically vital affect on the worth of Bangladesh foreign money as soon as overseas change reserve is included within the regression mannequin. Younus and Chowdhury (2006) made an try to analyse Bangladesh’s transition to floating regime and its affect on macroeconomic variables. They discover that output progress in Bangladesh carried out effectively within the intermediate and floating change fee regimes. Inflation is decrease within the intermediate regime regardless of greater cash provide and change fee depreciation. In addition they discover that foreign money depreciation boosted export progress within the floating regime.
Chowdhury and Siddique (2006) have analysed the change fee go by way of to home inflation in Bangladesh. Four The experiences of some nations within the area which applied main adjustments of their change fee regimes in recent times can present helpful classes for Bangladesh. I’ve tried to focus the comparability amongst totally different financial indicators between Bangladesh and among the South Asian Nations (Afghanistan, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka) all of which adopted independently floating change fee regimes.
Commerce and monetary coverage measures are essential for the nation’s financial system and out of that consideration, Bangladesh has taken a brand new change fee coverage in line with the obligations of IMF (article quantity: VIII), as on 24th March,1994 introducing present account totally convertible. On the identical time, Bangladesh was underneath stress since it’s the member of IMF. Because of this, Bangladesh took floating change fee system in present account on 31st Could, 2003. After that, IMF agreed Poverty Discount and Progress Facility (PRGF) for our nation with a brand new change fee system i,e, floating change fee system.
Nonetheless, Younus et al (2006) confirmed that free floating change fee system can organize the prevention of overvaluation of native foreign money as it’d make the export unattractive within the worldwide world in addition to different objects of importable items grew to become tough to bit with import items. He illustrated that the prime aim of free floating system of change fee is meant to keep away from the primary misalignment of change fee, specifically, to cease unpredictable appreciation of actual fee of change that may have an effect on the demand of the entire export of the nation.
The illustrations additionally included the encouragement of the export scenario and decline the shortfall of the present account, management inflationary scenario, and improve the place of inward remittances. Because the independence of the nation, Bangladesh is following an dynamic change fee system that has been replicated within the nominal change fee that had been declared by the central financial institution of the nation time to time. Islam (2003) said 89 modifications within the change fee of Bangladesh foreign money with USdollar since 1983 and amongst them, 83 had been melancholy.
Aziz (2003) illustrated 41 depreciation in 9 years (1991-2000). Younus et al (2006) confirmed that 130 occasions depreciation happened between 1972 to 2002 in Bangladesh Taka that additionally cut back steadiness of fee deficit. So, this paper, appropriately identifies the change fee as the primary vital factor for financial adjustments of the nation. After independence, Bangladesh fastened its Taka’s worth with British Pound Sterling on third 1972. Since 1972 to 1990 the Taka was overvalued. So there was an enormous deficit in Steadiness of fee that damage the financial system badly.
From 1990 the hole started to slender down. The change fee regime labored fairly effectively when it comes to steadiness of fee, inflation, export and remittance. So there have been some debate about incipience of this floating and criticism additionally rose about competence and preparation of Bangladesh Financial institution. However Bangladesh Financial institution carried out effectively in managing the ‘new born’. However there’s some volatility out there in latest previous. Bangladesh Financial institution, as a central financial institution of the nation intervened prudently to curve the volatility and market grew to become secure although Taka stays undervalued.
The experiences of South East and South Asian nations confirmed that they needed to intervene out there for easy shifting. The expertise helps the Mr. Kindleberger beliefs that “market work effectively on the entire” however sometimes “will likely be overwhelmed and 5 need assistance” from a lender of the final resort. (The Economist, July 19th 2003). So the regulator needs to be watchful in regards to the market’s conduct and intervene when wanted with out hesitations. Within the creating nation these sort of intervention needs to be proactive slightly than reactive.
Naeem and Rasheed analyzed one other vital situation of whether or not inventory costs and change charges are associated or not has obtained appreciable consideration after the East Asian crises. They stated that throughout the crises the nations affected noticed turmoil in each foreign money and inventory markets. If inventory costs and change charges are associated and the causation runs from change charges to inventory costs then crises within the inventory markets will be prevented by controlling the change charges. Furthermore, creating nations can exploit such a hyperlink to draw/stimulate overseas portfolio funding in their very own nations.
Equally, if the causation runs from inventory costs to change charges then authorities can concentrate on home financial insurance policies to stabilize the inventory market. If the 2 markets/costs are associated then buyers can use this data to foretell the conduct of 1 market utilizing the data on different market. In addition they claimed that many of the empirical literature that has examined the inventory prices-exchange fee relationship has targeted on inspecting this relationship for the developed nations with little or no consideration on the creating nations.
This paper will assess whether or not the change fee regime change certainly has created any vital affect on the financial system of the nation in addition to the comparative evaluation with the neighboring nations scenario. There are some potentialities in addition to difficulties in market primarily based system, so on this research there are some suggestions for the regulator and for the market gamers. To handle the floating change fee, full automation in addition to transparency is crucial in banking sector. Because the capital account of our financial system just isn’t convertible there’s little scope of capital flight.
If the inception of floating change fee is the start to liberalize capital account instantly that gained’t be a smart choice. 6 Chapter Three Alternate Fee Evolution in Bangladesh Introduction: The world financial system skilled some kind of fastened and versatile change fee. Earlier than 1875 there was Bimetalism of change fee after which the Gold Normal (1875-1914). Throughout Interwar interval (1914-1944) the classical Gold Normal damaged down and in July 1944 representatives of 44 nations succeeded to determine the ‘Bretton Woods’ system.
Once more the oil shock within the early 1970s and the dampen of demand damaged down this technique and world financial system shifted to versatile change fee. Bangladesh has been skilled two main change fee regimes because the nation’s Independence from 16th December1971. A Mounted Alternate Fee Regime from 1972 to 1979 and a Floating Alternate Fee Regime since Could 2003. Among the many time-frame from 1971 to 2003, there have been totally different change fee preparations when it comes to the foreign money mechanism, like: Pegged to Pound Sterling (? :1972-1979;Pegged to a basket of main buying and selling companions’ currencies(? because the intervening currencies):1980-1982;Pegged to a basket of main buying and selling companions’ currencies(US$ because the intervening currencies):19831999;Adjusted Pegged System:2000-2003;Floatig Alternate Fee System: Could 30, 2003Current. All of the insurance policies of change fee system Bangladesh applied, with the aims of accelerating exports, decreasing import stress and enhance the steadiness of commerce. After independence, Bangladesh fastened its Taka’s worth with British Pound Sterling on third 1972.
Since 1972 to 1990 the Taka was overvalued. So there was an enormous deficit in Steadiness of fee that damage the financial system badly. From 1990 the hole started to slender down. The change fee regime labored fairly effectively when it comes to steadiness of fee, inflation, export and remittance. Three. 1 Elements Affecting Alternate Fee: Underneath Floating Alternate Fee Preparations Alternate Fee is primarily decided by demand for overseas foreign money and Provide of overseas foreign money the place demand and provide of overseas foreign money can be affected by another delicate elements.
In response to Jeff. Madura, (Worldwide Monetary Administration) theoretically demand for overseas foreign money is set by a number of elements like, import funds, service funds which incorporates revenue funds, debt service funds, overseas funding (outward) and overseas funding (outward). The provision of overseas foreign money consists of export Receipt, service receipts which incorporates revenue receipts, debt service receipts, overseas support (inward) and overseas Funding (inward).
Moreover these another elements have an effect on the change fee actions. The elements are a)Buying Energy parity; b)Rate of interest parity; c) Relative revenue differential; d)Authorities Management; e)Expectations and so on. 7 Three. 2 Efficiency of earlier and present FX-Regime in Bangladesh To judge the efficiency of Bangladesh contemplating the 2 totally different change fee regimes, some information comparability have been made amongst three neighboring nations in South Asia. These are India, Pakistan and Sri Lanka. Three. 2. Progress fee of GDP Evaluating the proportion of progress fee with main neighboring Nations, the next desk reveals that Bangladesh was roughly in the same scenario earlier than the adoption of floating change fee regime. Since 2003 with the brand new floating change fee system, there’s additionally a optimistic pattern of the GDP progress fee besides 2009-2010. The worldwide recession have an effect on the general progress of the nation at the moment. Desk Three. 1: Progress fee of GDP (% per 12 months) Y Nation Banglades h India Pakistan Sri Lanka 2001 5. Three 5. Eight 1. Eight -1. 5 2002 Four. Four Four. Zero Three. 1 Four. Zero 2003 5. Three Eight. 2 5. 1 5. 9 2004 5. 7 7. Four 5. 5 5. E 2005 A 2006 R 200 7 6. Four 9. 2 6. Eight 6. Eight 6. Zero 6. 6 7. 6 9. 7 5. Eight 5. Eight 5. 5 7. 7 200 Eight 6. 2 6. 7 Three. 7 6. Zero 200 9 5. 7 Eight. Zero 1. 2 Three. 5 2010 5. Eight Eight. 6 Four. 1 7. 6 2011 6. Three Eight. 2 2. 5 Eight. Zero Supply: Asian Improvement Outlook-2004 and 2011, ADB Three. 2. 2 Present Account Steadiness Compared to different main South Asian nations, the desk no. -2 reveals that Bangladesh’s achievement when it comes to containing present account steadiness is healthier after the adoption of floating change fee regime (since 2003). It has completed persistently higher than among the neighboring nations like Sri Lanka, Pakistan, and India in all latest years excepting 2005.
Desk No. Three. 2 Present Account Steadiness as Percentages of GDP Y 2003 Zero. 5 Zero. 7 5. 9 -2. 2 E 2004 Zero. Zero Zero. Three Three. Zero -Three. Zero A 2006 1. Three -1. 2 -Three. 9 -5. Three R 2007 1. Four -1. Four -Four. Eight -Four. Three Nation Banglades h India Pakistan Sri Lanka 1999 -1. 5 -1. 1 -Three. Zero -Three. 6 2000 -1. 1 -Zero. Eight -Zero. Four -6. Four 2001 -2. Three Zero. 2 Zero. 6 -1. 5 2002 Zero. Four Zero. Eight Four. 6 -1. Eight 2005 -1. 5 Zero. Three 2. 1 -Three. 5 2008 Zero. 9 -2. Four -Eight. 5 -9. 5 2009 2010 2. 7 Three. 7 -2. Eight -5. 7 -Zero. 5 -Three. Zero -2. 2 -Three. Eight 2011 Zero. 2 -Three. 5 -1. 7 -Four. Zero Supply: Asian Improvement Outlook-2011, ADB Eight Three. 2. Inflation State of affairs Alternate fee regime and inflation are related as a result of a change within the change fee is nearly sure to trigger a change within the home value of tradable and not directly the worth of non-tradable additionally. The worldwide competitiveness of the financial system is badly eroded by inflation. It usually encourages capital flight, exacerbates revenue distribution, provides rise to inequities in revenue distribution and aggravates poverty. The related information are offered within the following desk no. -Three. Desk Three. Three: Inflation in Bangladesh and Chosen South Asian Nations Y 2002 200 Three 2. Eight Four. Four Three. Four Three. 5 10. 2 5. Three Three. 1 2. 6 E 200 Four Four. 5. Zero Four. Zero A 2005 5. 2 5. Zero 6. 2 2006 7. 2 5. 2 7. 9 10. Zero R 200 7 7. 2 5. Zero 7. Eight 15. Eight Nation Banglades h India Pakistan Sri Lanka 1999 Eight. 9 Three. Three 5. 7 5. 9 2000 Three. Four 7. 2 Three. 6 1. 2 2001 1. 6 Four. 7 Four. Four 11. Zero 200 Eight 9. 9 Eight. 7 12. Zero 22. 6 200 9 6. 7 2. 1 20. Eight Three. Four 2010 7. Three 9. 2 11. 7 5. 9 2011 Eight. Zero 7. Eight 16. Zero Eight. Zero Supply: Asian Improvement Outlook-2011, ADB It’s exhibiting that there’s an rising pattern of inflation because the adaptation of floating change fee regime. Knowledge on inflation charges symbolize interval averages. Apart from India, which stories the wholesale value index, inflation charges offered are primarily based on client value indexes.
The upper inflationary scenario happen due oil and meals value hike within the worldwide market in addition to a number of pure catastrophe like, Sidor, flood and so on. Three. Three Justification of Floating Alternate Fee: From the above talked about information evaluation, it may be stated the earlier regime carried out fairly effectively in sure standards. The foremost causes behind the adoption of latest change fee system is principally the federal government’s dedication to the liberalization of the nation’s financial system and to take the suitable steps to create appropriate surroundings of the financial system for getting into into capital account convertibility regime.
Fairly than this, there was IMF’s ‘conditionalities’ to enter into new floating change fee regime. Three. Four The Transition from Mounted to Float: To fulfill up the financial demand and to meet the IMF conditionality, on 29 Could, 2003 Bangladesh Financial institution issued a round stating- efficient from 31st Could, 2003, Bangladesh Financial institution floated its change fee and adopted a totally market primarily based change fee for Taka. Underneath this association, change fee is set on the premise of demand and provide of the respective currencies.
Instantly after the inception of floating change fee banks, economists, foreign money merchants and businessmen have welcomed the deregulation of the change fee saying that 9 the nation’s overseas commerce and remittance would get a boast up on account of it and it might make the foreign money market extra environment friendly and efficient. Because the introduction there is no such thing as a uncommon elevate of change fee until mid 2004. More often than not Taka maintains appreciating place throughout this era and Bangladesh Financial institution present an incredible efficiency managing the ‘new born’ change fee system.
Throughout mid 2004, Taka confronted vital volatility in opposition to USD and it continued as much as August 2004. After that interval, the volatility of change fee of Taka in opposition to USD eased however ensuing to appreciated USD until mid January 2005. In latest occasions, Taka has depreciated considerably in opposition to USD within the inter-bank market. This has occurred as due to value hike in oil value and scrap vessel within the worldwide market created a surge on import settlements. Figure3. Four: Alternate Fee Motion instantly after inception of Floating Alternate Fee Movment 58. 7 58. 65 58. 6 58. 55 58. 5 58. 45 58. Four 58. 35 58. Three 58. 25 58. Alternate Fee TK/$ Jun’-01 Jun’-04 Jun’-08 Jun’-11 Jun’-15 Jun’-18 Jun’-22 Jun’-25 Jun’-29 July’-03 July’-07 July’-10 July’-14 July’-17 July’-21 July’-24 July’-28 Banking days Supply: Bangladesh Financial institution Unpublished Knowledge Habits of Actual Efficient Alternate Fee (REER) and Nominal Alternate Fee: REER is taken into account as a guiding FX-rate to the coverage maker in addition to the market members and it additionally reveals the worldwide competitiveness of nations items and companies. The coverage makers are at all times tried to maintain the Nominal Alternate Fee close to to the REER. Earlier than 1990 Taka was overvalued (see desk no-01,02 and 03. that distorted our worldwide competitiveness and that was the causes of extended Steadiness of Cost disaster. Figure3. 5: Comparability of month finish Actual Efficient Alternate Fee (REER) and Nominal Alternate Fee between 2003-2004. 10 July’-31 62. 00 61. 00 60. 00 Habits of REER and Nominal FX-Fee Fee TK/$ 59. 00 58. 00 57. 00 56. 00 55. 00 54. 00 REER-2003 53. 00 Nominal TK/$-2003 Jan Feb Mar Apr Could Jun Jul Aug Sep Oct Nov Dec REER-2004 Nominal TK/$-2004 Months Supply: Bangladesh Financial institution Unpublished Knowledge After 1990, Taka remained undervalued. The hole between Nominal Alternate Fee and REER had been widened over the interval.
Earlier than inception of floating change fee Taka was nearly working on a free float for the final 12-15 month as charges had been determined in line with demand-supply scenario and liquidity in market. Bangladesh Financial institution was additionally not just about promoting any greenback that point. This implies the market has already factored in floating change fee. Furthermore, earlier than inception Bangladesh Financial institution took some measures for strengthening regulation, reminiscent of, holding shut commentary of Approved Seller’s (AD’s) every day actions; particularly on ‘Open Place’, gave stress for reconciliation of NOSTRO account steadiness, encourage each financial institution to arrange dealing room and ressurized to make fee in due time and so on. So we are able to clearly say that approach to the floating change fee was ready. 11 Chapter Four Efficiency of Floating Alternate Fee System On Macro Economic system of Bangladesh Introduction of floating change fee was debatable situation and likewise there have been some criticisms in regards to the competence of Bangladesh Financial institution’s from some nook. However Bangladesh Financial institution carried out an incredible efficiency. There was no volatility; no hypothesis in value and market behaves rationally. If we take into account the market statistics, we discover that macro financial variables have optimistic performances over the time period.
Three main variables have been thought of for evaluating the affect of change fee with them. The variables are Export, Employees Remittances and Overseas reserve. Four. 1 The Export State of affairs: The export pattern from 1998 to 2011 reveals an rising pattern. It’s proven right here that there’s upward pattern of export after 2003,i. e, after adopting the floating change fee regime, the export has a strong progress within the financial system. Determine:Four. 1: The Export Quantity in US$ Supply: Bangladesh Financial institution Quarterly, January-March 2011 Through the international recession, the export pattern of Bangladesh was not that a lot affected principally for the RMG sector.
Within the FY 09 and FY 10, the export quantity elevated considerably. Four. 2 Enhancement of Employees Remittance: The Inward remittances from Bangladeshi nationals working overseas remained robust in FY10 even within the face of world financial slowdown and continued to play an vital position in strengthening the present account. Receipts on this sector elevated by 13. Four % to USD 10987. 40 million in FY10 from USD 9689. 26 million in FY09. The underlying purpose was that Bangladesh Financial institution has simplified the approval coverage of drawing preparations between overseas change homes and home banks.
Because of this, 40 banks 12 have been allowed for establishing 885 drawing preparations with 300 change homes everywhere in the world for amassing remittances, (of which roughly 650 drawing preparations with 250 change homes are operative now). Determine-Four. 2: The Employees Remittance Supply: Bangladesh Financial institution Quarterly, January-March 2011 Contemplating the expansion fee of staff’ remittances, it has been noticed that the speed is sort of greater after the free floating change fee regime that’s 20. 52 % (2003-2010) than that of fastened change fee regime of Bangladesh which is calculated as 11. 9% (19932002). The rising quantity of staff remittance helps to steadiness the commerce deficit in a prudent method. Four. Three Reserve Place: The quantity of overseas change reserve has been elevated considerably over the past couple of years. Through the FY 2003 to FY 2005, the pattern was fairly regular and flat. However, it has an upward pattern after FY 2007. The principle sources of overseas reserve are staff remittance, overseas loans and grants and exports. 13 Determine-Four. Three: The Overseas Reserve Place Interval Reserves($) 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 469. 6 2705 2930 3483. Eight 5077. 2 6148. Eight 7470. 9 10749. 7 10911. 6 Supply: Bangladesh Financial institution Quarterly, January-March 2011 After the inception of floating change fee regime, the overseas change reserve boosted up on account of big quantity of staff remittance and rising pattern of export. Four. Four The Progress Fee of GDP: The GDP progress fee reaches upto 6. 7% throughout FY 11. From 1994 to 2010, the common progress fee of GDP was 5. 47% reaching at excessive of 6. 63% in June 2006. The file low fee was Four. 08% throughout June 2004. For the final couple of years the expansion fee was 5% above and Bangladesh is onsidered as a creating nation. Determine-Four. Four: Bangladesh GDP Progress Fee Supply: Bangladesh Bureau of Statistics,2011 14 Four. 5 The connection among the many variables: The connection between the change fee and three variables i,e, export, remittance and reserve displays fairly optimistic in correlation. The correlation has been computed contemplating the information from 2002-2011. Correlation Alternate Fee Export Zero. 928315219 Remittance Zero. 859373146 Reserve Zero. 825444493 One regression evaluation has been completed with staff remittance and change fee.
The aim of the quantitative evaluation is to determine if there’s any relationship between change fee and staff remittance of Bangladesh. The month-to-month information of staff remittance from the monetary 12 months 2007-2008 to monetary 12 months 2011-2012 has been taken for the calculation. The regression mannequin, change fee is unbiased variable and remittance depends variable. The regression mannequin is: Y=66. 15+. 010385 remittance The worth of R sq. is . 37 which implies that the regression mannequin explains 37% variation in change fee. The coefficient could be very low which is and P worth is sort of excessive that’s Three. 74.
So, the remittance doesn’t present any vital affect on overseas change fee. 15 Chapter 5 Alternate Fee State of affairs 5. 1 Alternate Fee Motion: Within the latest Taka depreciates in opposition to US$ drastically: Over the interval, July 2010-January 2012, from Tk 70 to Tk 86 — a miserable 23% fall down. Determine-5. 1: Alternate Fee Motion Supply: Web site OANDA The sharp fall of taka in opposition to US greenback continues for final couple of months. US greenback has been weakening in opposition to many different robust currencies like Euro, SF, Yen and GBP however getting stronger in opposition to Bangladesh Taka. Alternate fee depreciation creates the financial system in a difficult scenario.
Steady depreciating tendency greater the inflation fee that finally improve the commerce deficit. The continued depreciation of Bangladeshi taka is changing into the problem for the central financial institution in addition to the Authorities. The rising pattern of the commerce deficit (determine: 7) additionally reveals the potential of the scarcity of provide of the overseas foreign money i,e, US$ out there. 5. 2 Causes for Foreign money Depreciation: The explanations behind the foreign money depreciation are influenced by financial basic, change fee regime and Buying and selling guidelines. There’s a sluggish pattern of capital influx within the nation for the final couple of years.
The principle causes for which can be low tendency of overseas direct funding and rising pattern of commerce deficit. 16 5. 2. 1 Excessive Inflation: Inflation is showing as a significant risk within the financial system within the latest previous. Inflation had a average pattern upto 2003 inside 6%. It began rising from 2004 and acquired sharp rise in 2008-2009 and the rising pattern continues to be persevering with. The principle explanation for excessive inflation in Bangladesh is oil and meals value hike in overseas. Determine 5. 2: Inflation Supply: Month-to-month Financial Development-Bangladesh Financial institution, January 2012 The excessive stage of inflation within the financial system results in decrease the worth of native foreign money taka.
To cowl the deficit funds, Authorities borrowings from the Central Financial institution (BB) and total cash provide elevated results in excessive inflation out there. 5. 2. 2 Low Overseas Direct Funding: The expansion fee of overseas direct funding is exhibiting a declining pattern. The info has been used from 1996 to 2011. After 1998 and so forth, the pattern began to say no sharply. It elevated somewhat bit throughout 2004-2005 however once more has a really declining pattern. 17 Determine-5. Three: Progress Fee of Overseas Direct Funding Supply: Month-to-month Financial Development-Bangladesh Financial institution, January 2012 Within the latest previous, the FDI progress fee is severely low.
So, correct steps are purported to be taken by the federal government authority. 5. 2. Three Commerce Deficit: Although the export quantity has an rising pattern because the inception of floating change fee regime, there’s big quantity of commerce deficit with an rising pattern. 18 Determine: 5. Four Commerce Deficit of Bangladesh Supply: Month-to-month Financial Development-Bangladesh Financial institution , January 2012 The quantity of import has been elevated sharply after 2006-2007. The hole between export and import turns into big over the past monetary 12 months 2010-2011. As a consequence of big import fee, authorities debt has elevated considerably within the nation and demand for overseas foreign money elevated. 9 Chapter 6 Suggestions and Conclusion Contemplating the above talked about discussions, some suggestions have been formulated with the intention to convey stability within the overseas change market within the brief run and future for the Authorities and Bangladesh Financial institution i,e, the central financial institution of the nation. These are discussing as follows: 6. 1. Management Inflation: Efficient measures are wanted to be taken by the central financial institution to manage inflation by decreasing cash provide within the financial system. The formulation of the tighten financial coverage by the central financial institution is a crucial issue for controlling inflation.
However the deficit funds of the Authorities creates big Authorities Debt and delay inflationary environment. The associated elements for decreasing deficit funds 6. 2. Cut back Commerce Deficit: One of many vital parts to cut back the commerce deficit is to reinforce export quantity of products and companies. Bangladesh is a import depended nation. The principle importable objects are petroleum and meals. Native industrialization is utmost vital specifically within the meals sector (substitute meals objects manufacturing) and different exportable objects to cut back big legal responsibility of the Authorities. 6. Three Enhancing Overseas Direct
Funding: Enough influx of overseas direct funding may improve the capital influx within the nation for long run. Bangladesh Authorities has particular coverage for inviting FDI. Guaranteeing good governance, Infrastructural growth, Utility, political stability will assist to advertise extra funding from overseas within the nation. 6. Four Quick Time period Overseas Borrowings: Borrowings from overseas is another choice for supplying liquidity out there. However the issue of short-term borrowing is that the nation could fall into “Debt-trap” on account of be unable to pay the cash on time.
As soon as the overseas foreign money injects out there, it’s tough to remember kind the market as effectively. The Central Financial institution of Philippines in early 1990 will be remembered right here. As a consequence of short-term borrowing to fulfill the native market demand, acquired big overseas legal responsibility. Steady losses eroded it’s capital base and made it bankrupt in 1993. It took 25 years to reestablish the brand new central financial institution in that nation. So, As an alternative of overseas borrowings, Concessionary loans at a low rate of interest from World Financial institution and ADB and different bilateral donors is likely to be a greater choice to fulfill the continued hole out there. . 5 Efficient Capital Market: The capital market growth is utmost vital with the intention to convey the regular scenario in FX market. Guaranteeing sufficient circulate of Overseas Portfolio Funding (FPI), good governance and safety within the capital market is time demand. 6. 6 Derivatives Market: Introduction of varied by-product merchandise as choices, foreign money swap, curiosity cap, curiosity swap, futures, forwards and so on, in addition to making certain big portfolio funding may convey the optimistic affect within the change fee market. 20 6. Formation of Home FX Market: A proper foreign exchange market discussion board needs to be created, with the participation of unbiased skilled our bodies and with illustration from the sellers affiliation, Bangladesh Financial institution and different related authorities officers. This discussion board would offer the logistic assist and platform for the foreign exchange market. Ideally, this discussion board would develop a secured web-based market to which solely the members or taking part organizations would have entry. From this web site, all of the logistic assist required for finishing the foreign exchange dealings among the many members/taking part organizations might be supplied. 6. Autonomy of the Central Financial institution: The autonomy of the central financial institution is fascinating situation for the financial system. The central financial institution ought to function and carry out independently with full automation. Conclusion: This research reveals that floating change fee regime has constructive impact on financial progress. The transition interval from Mounted fee regime to Floating fee regime was fairly easy and secure. There may be vital progress within the basic financial variables on the lengthy path of the brand new change fee regime. The pattern of export, staff’ remittances and overseas reserves have been analyzed and located appreciable progress on these variables.
Nonetheless, the continued change fee depreciation together with excessive inflation is changing into a difficult situation for the regulators and Authorities as effectively. The hole between demand and provide of overseas foreign money out there is getting greater within the excessive inflationary financial system which lead steady loses within the worth of the native foreign money. The important thing causes have been discovered for the foreign money depreciation are inflation, authorities debt, commerce deficit, low FDI and so on. The research really useful some points for Authorities’s and Central’s financial institution’s half. The regulation needs to be proactive slightly than reactive.
There are some potentialities on this new regime; to reap this potentiality, Authorities in addition to regulators ought to take efficient steps. 21 REFERENCES Asian Improvement Financial institution. 2011. Asian Improvement Outlook 2010 Replace. Asian Improvement Financial institution. 2006. Asian Improvement Outlook 2005, ADB: Manila, Philippines. Asian Improvement Financial institution. Manila,Philippines. 2005. Asian Improvement Outlook 2005, ADB: Asad Karim Khan Priyo, June 2009,Affect of the Alternate Fee Regime Change on the Worth of Bangladesh Foreign money. Bangladesh Financial institution Annual Stories. 2010.
Dhaka Bangladesh. Bangladesh Financial institution Month-to-month Financial Development. January 2012 Bangladesh Financial institution, Scheduled Financial institution Statistics. July-September 2011. Monetary Sector Evaluation, 2006, Bangladesh Financial institution. Hossain, Akter. 2002, Alternate Fee, Capital flows and Worldwide Commerce. Hossain, M. A. , and Alauddin, M. , (Fall 2005), Commerce Liberalization in Bangladesh: The Course of and Its Affect on Macro Variables Notably Export Enlargement, The Journal of Creating Areas, Quantity 39, Difficulty 1, 127-150. Jeff. Madura, Worldwide Monetary Administration, 10th version. Islam, Mirza A. 2003): “Alternate Fee Coverage of Bangladesh – Not Floating Does Not Imply Sinking”, Keynote Paper offered at dialogue organized by Centre for Coverage Dialogue, Bangladesh – January 2, 2003. Nusrate Aziz . June 2008. The Position of Alternate Fee in Commerce Steadiness: Empirics from Bangladesh. The IMF, Annual Report 2010, Monetary operations and transactions, The Worldwide Financial Fund. Younus, S. and Chowdhury, M. I. , (December 2006), An Evaluation of Bangladesh’s Transition to Versatile Alternate Fee Regime, Working Paper Collection. 22 APPENDIX I Commerce Deficit of Bangladesh Export Import 12 months (in million USD) (in million USD) 1994-95 3472. 5250. 6 1995-96 3882. Four 6237. 9 1996-97 4418. Three 6436. Eight 1997-98 5161. 2 6768. Zero 1998-99 5312. Eight 7205. Four 1999-00 5752. 2 7536. 6 2000-01 6467. Three 8401. 5 2001-02 5986. 1 7686. Zero 2002-03 6548. Four 8691. Eight 2003-04 7603. Zero 9812. 9 2004-05 8654. 5 11832. 1 2005-06 10526. 2 13271. 7 2006-07 12177. 9 15441. Zero 2007-08 14110. Eight 19481. Four 2008-09 15565. 2 20291. Four 2009-10 16204. 7 21388. 2 2010-11 22928. 2 32398. Four Supply: Month-to-month Financial Development-Bangladesh Financial institution , January 2012 Commerce Deficit (in million USD) -1778. 1 -2355. 5 -2018. 5 -1606. Eight -1892. 6 -1784. Four -1934. 2 -1699. 9 -2143. Four -2209. 9 -3177. 6 -2745. 5 -3263. 1 -5370. -4726. 2 -5183. 5 -9470. 2 23 Yearly Reserve Place In million USD Reserves($) Interval 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Supply: Month-to-month Financial TrendBangladesh Financial institution , January 2012 2469. 6 2705 2930 3483. Eight 5077. 2 6148. Eight 7470. 9 10749. 7 10911. 6 24 Yearly information of Employees Remittance: Remittances 12 months/Month 2011-2012* 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 1999-2000 1998-1999 1997-1998 1996-1997 1995-1996 1994-1995 1993-1994 1992-1993 In million In million US greenback Taka Progress Fee 2117. 7 11650. 32 10987. Four 9689. 26 7914. 78 5998. 47 4802. 41 3848. 29 3371. 97 3061. 97 2501. 13 1882. 1 1949. 32 1705. 74 1525. 43 1475. 42 1217. 06 1197. 63 1088. 72 944. 57 157668. 7 829928. 9 760109. 59 666758. 5 542951. Four 412985. 29 322756. Eight 236469. 7 198698 177288. 2 143770. Three 101700. 1 98070. Three 81977. Eight 69346 63000. Four 49704 48144. 7 43549 36970. Four Common Fee Progress 13. 39772078 22. 41982721 31. 94664639 24. 90541207 24. 79334977 14. 12586707 10. 12420109 22. 42346459 32. 8903884 -Three. 448382 14. 28001923 11. 82027363 Three. 389543316 21. 22820568 1. 622370849 10. 00349034 15. 2609 20. 51706112 11. 89409131
Supply : Overseas Alternate Coverage Division, Bangladesh Financial institution Bangladesh Financial institution Annual Report 2009-2010 Progress fee is self calculated 25 Yearly information of Inflation 12 months 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Level to Level 1. 66 Three. 58 5. 03 5. 64 7. 35 7. 54 9. 2 10. 04 2. 25 Eight. 7 10. 17 11. 59 12 months common 1. 94 2. 79 Four. 38 5. 83 6. 48 7. 16 7. 2 9. 94 6. 66 7. 31 Eight. Eight 10. 91 Supply: Month-to-month Financial Development-Bangladesh Financial institution , January 2012 26 Yearly information of Export, Remittance, Reserve and Exchanger Fee (In million USD) Employees 12 months FX Fee Export Remittance in mil US$ (in mil US$) 62. 691 2501. 13 FY02 5985. 89 63. 2216 3061. 97 FY03 6548. 54 64. 0869 3371. 97 FY04 7602. 99 68. 0508 3848. 29 FY05 8654. 52 73. 9865 4802. 41 FY06 10526. 16 74. 1681 5998. 47 FY07 12177. 86 73. 4636 7914. 78 FY08 12685. Four 73. 8228 9689. 26 FY09 14170. 7 74. 5518 10987. Four FY10 14763. Eight 79. 1877 11650. 32 FY11 20313. Eight Supply: Month-to-month Financial Development-Bangladesh Financial institution , January 2012 Reserve (in mil US$) 1582. 9 2469. 6 2705 2930 3483. Eight 5077. 2 6148. Eight 7470. 9 10749. 7 10911. 6 27 Month-to-month information of Remittance and Alternate Fee 12 months Month Remittance ( In million USD) Ex fee (common) 12 months Month Remittance ( In million USD) Ex fee (common) Zero07-08 2008-09 2009-10 July August September October November December January February March April Could June July August September October November December January February March April Could June February March April Could June July August September October November December January February March April Could June 567. 11 470. 95 590. 67 559. 05 617. 39 635. 34 710. 74 689. 26 808. 72 781. 71 730. 26 753. 58 820. 71 721. 92 794. 18 648. 51 761. 38 758. 03 859 784. 47 885. 67 840. 99 895. Three 850. 5 784. 47 885. 67 840. 99 895. Three 850. 5 885. 38 935. 15 887. 57 900. 70 1050. Four 873. 86 952. 39 827. 96 956. 49 922. 16 903. 05 892. 15 73. 6518 73. 4389 73. 5663 73. 3004 73. 2946 73. 473 73. 4672 73. 4063 73. 2738 73. 4847 73. 2841 73. 3473 73. 38 73. 4947 73. 2884 73. 6468 73. 7971 73. 691 73. 7961 73. 8126 73. 8073 74. 1052 73. 9459 73. 9413 73. 8126 73. 8073 74. 1052 73. 9459 73. 9413 73. 9214 73. 6394 73. 7567 73. 7551 73. 5378 73. 8549 73. 8181 73. 9592 74. 2051 74. 0648 74. 4125 74. 6026 2010-11 2011-12 July August September October November December January February March April Could June July August September October November December 57. 31 963. 92 837. 71 923. 85 998. 64 969. 10 970. 54 986. 97 1102. 98 1001. 97 998. 42 1038. 91 1015. 58 1101. 79 855. 44 1039. 48 908. 79 1147. 22 74. 5447 74. 4778 74. 5078 75. 0673 75. 3246 75. 5892 75. 8669 76. 0948 76. 8504 77. 8919 78. 42 78. 843 79. 6805 79. 534 79. 7888 80. 9414 81. 9104 84. 1857 28 Supply: Month-to-month Financial Development-Bangladesh Financial institution , January 2012 Regression Evaluation: Alternate Fee and Remittance SUMMARY OUTPUT Regression Statistics A number of R R Sq. Adjusted R Sq. Normal Error Observations Zero. 610778 Zero. 373049 Zero. 360993 2. 020275 54
ANOVA df Regression Residual Whole 1 52 53 SS 126. 2866232 212. 2385435 338. 5251666 Normal Error 1. 622261594 Zero. 001867047 Decrease 95. Zero% 62. 90219774 Zero. 006638903 Higher 95. Zero% 69. 41280968 Zero. 014131912 MS 126. 2866 Four. 08151 F 30. 94114904 Significance F 9. 36275E-07 Coefficients Intercept X Variable 1 66. 1575 Zero. 010385 t Stat 40. 78103 5. 562477 P-value Three. 7402E-41 9. 36275E-07 Decrease 95% 62. 90219774 Zero. 006638903 Higher 95% 69. 41280968 Zero. 014131912 2 FOREIGN DIRECT INVESTMENT (FDI) INFLOWS AND STOCKS BY COMPONENTS IN BANGLADESH (In million US$) Inflows Interval 996-97 Jul-Dec Jan-Jun 1997-98 Jul-Dec Jan-Jun 1998-99 Jul-Dec Jan-Jun 1999-00 Jul-Dec Jan-Jun 2000-01 Jul-Dec Jan-Jun 2001-02 Jul-Dec Jan-Jun 2002-03 Jul-Dec Jan-Jun 2003-04 Jul-Dec Jan-Jun 2004-05 Jul-Dec Jan-Jun 2005-06 Jul-Dec Jan-Jun 2006-07 Jul-Dec Jan-Jun 2007-08 Jul-Dec Jan-Jun 2008-09 Jul-Dec Jan-Jun 2009-10 Jul-Dec Jan-Jun 2010-11 JulyDec. Jan-Jun Supply : Shares Whole 366. 85 157. 63 209. 22 603. 30 366. 07 237. 23 394. 10 339. 23 54. 87 383. 22 254. 25 128. 97 563. 92 449. 67 114. 26 393. 76 240. 21 153. 56 379. 18 174. 75 204. 43 284. 16 145. 82 138. 34 803. 78 322. 06 481. 72 744. 61 363. 54 381. 07 792. Four 411. 41 381. 33 768. 69 285. 03 483. 66 960. 59 602. 65 357. 94 913. 02 342. 22 570. 80 Fairness Capital 136. 71 40. 79 95. 92 349. 02 236. 14 112. 88 195. 54 167. 63 27. 91 152. 98 109. 56 43. 42 372. 27 306. 76 65. 51 230. 11 168. 27 61. 84 163. 98 71. 97 92. 01 111. 23 64. 13 47. 10 361. 14 108. 79 252. 35 447. 22 173. 24 273. 98 464. 50 229. 67 234. 83 545. 69 166. 78 378. 91 535. 42 430. 34 105. 08 515. 14 113. 47 401. 67 Reinvested Incomes 151. 27 79. 92 71. 35 181. 31 92. 10 89. 21 120. 71 100. 67 20. 04 80. 71 56. 19 24. 52 81. 00 53. 25 27. 75 84. 66 37. 26 47. 40 164. 97 69. 42 95. 55 161. 38 74. 58 86. 80 297. 1 152. 99 144. 12 198. 64 103. 36 95. 28 281. 00 169. 46 111. 54 197. 71 101. 70 96. 01 336. 61 149. 72 186. 89 331. 10 178. 05 153. 05 Intracompany Loans 78. 87 36. 92 41. 95 72. 97 37. 83 35. 14 77. 85 70. 93 6. 92 149. 53 88. 50 61. 03 110. 66 89. 66 21. 00 79. 00 34. 68 44. 32 50. 23 33. 36 16. 87 11. 55 7. 11 Four. 44 145. 53 60. 28 85. 25 98. 75 86. 94 11. 81 47. 24 12. 28 34. 96 25. 29 16. 55 Eight. 74 88. 56 22. 59 65. 97 66. 78 50. 70 16. 08 Fairness Capital … … … … … … … … … 1010. 45 968. 83 1010. 45 1182. 07 1215. 54 1182. 07 1408. 98 1325. 97 1408. 98 1579. 15 1472. 70 1579. 15 1854. 10 1818. 86 1854. 10 2123. 50 1940. 7 2123. 50 2468. 63 2268. 39 2468. 63 2857. 96 2736. 50 2857. 96 3719. 99 3068. 07 3719. 99 3909. 60 3823. 32 3909. 60 5014. 96 4426. 69 5014. 96 Reinvested Incomes … … … … … … … … … 505. 89 492. 80 505. 89 470. 44 470. 37 470. 44 505. 13 494. 15 505. 13 637. 75 550. 10 637. 75 708. 43 649. 08 708. 43 880. 01 822. 04 880. 01 974. 18 904. 81 974. 18 1146. 22 1133. 87 1146. 22 873. 76 1109. 59 873. 76 903. 65 742. 04 903. 65 544. 21 474. 06 544. 21 Intracompany Loans … … … … … … … … … 459. 04 428. 96 459. 04 454. 29 475. 85 454. 29 448. 82 382. 08 448. 82 410. 64 427. 89 410. 64 321. 16 408. 03 321. 16 362. 10 328. 7 362. 10 322. 72 363. 95 322. 72 364. 23 316. 86 364. 23 210. 68 221. 12 210. 68 325. 94 250. 66 325. 94 410. 29 378. 17 410. 29 Whole … … … … … … … … … 1975. 38 1890. 59 1975. 38 2106. 80 2161. 76 2106. 80 2362. 93 2202. 20 2362. 93 2627. 54 2450. 69 2627. 54 2883. 69 2875. 97 2883. 69 3365. 61 3090. 68 3365. 61 3765. 53 3537. 15 3765. 53 4368. 41 4187. 23 4368. 41 4804. 43 4398. 78 4804. 43 5139. 19 4816. 02 5139. 19 5969. 46 5278. 92 5969. 46 118. 31 211. 57 12. 64 131. 64 233. 62 71. 26 Statistics Division, Bangladesh Financial institution. 342. 52 436. 52 5196. 21 5143. 70 533. 65 612. 69 342. 21 462. 67 6072. 07 6219. 06 Three
