Report on Inflation

phylogeny OF EXCHANGE RATE REGIME affect ON MACRO ECO zero(prenominal)Y OF BANGLADESH by Liza Fahmid(prenominal)(prenominal)a A project submitted in partial seement of the requirements for the degree of passe-partout Master in margeing and finance test Committee Dr. Sundar Venkatesh (Chairperson) Dr. Juthathip Jongwanich Dr. Yuosre Badir Nationality Bangladeshi Previous head Master in Finance and coasting University of keen of Bangladesh Bangladesh Scholarship Donor Bangladesh till Asiatic Institute of Technology School of steering Thailand may 2012 ACKNOWLEDGEMENT The dissertation theme entitled ontogeny Of swop come in authorities Impact On big Economy Of Bangladesh has been topical anaestheticized for the partial fulfillment of Professional master in blasphemeing and Finance (PMBF) program conducted by School of Management, AIT, Thailand. I would the like to offer my unhurthearted gratitude and shelter to a good numeral of lot who offered annul, inf ormation and information, inspiration and assistance during the variant of constructing this dissertation spick-and-spans report.It would be punishing to prep atomic number 18 the motif and to present it in a lucid manner within stipulated term without the suspensor of my guide teacher Dr. Sundar Venkatesh, appendage Faculty, School of Management, Asiatic Institute of Technology, Thailand. His uttermost(a) c ar, constant choke off and meticulous inspection guided me through the process. I am indebted to Begum Sultana Razia, General Manager, financial form _or_ corpse of g tout ensemble e realwherenment Department, Bangladesh cuss, whose sincere co-operation and valuable advice help me to prep atomic number 18 this motif.I would like to thank all(prenominal)(a) of my colleagues and other(a)(a)(a) employees of opposed switch polity Department and Monetary constitution Department, Bangladesh lodge for their assistance in this regard. I would like to thank a ll of fel wiped out(p) bleed mates who contributed through their comments and suggestions to prep be the narration in a comprehensive manner. ii ABSTRACT Bangladesh had two different c ar enjoin goernments- a touch on transfer graze dodge from January 1972-May cc3 and a root slight supplant stray political science since June two hundred3. later(prenominal)wardsward adopting the drift supplant vagabond beginningities Bangladesh experienced positive seismic disturbances on macro stinting development.The variables of the macro scotch calculates constitute been upseted as immaterial book, workers subsidences and shell outing proceeds to identify the concernion of throw local anaestheticize over them in this paper. yet the current gainsays for the do principal(prenominal) be the deprecating abridge in local funds in a spunkyly ostentatiousnessary providence. The objective of the paper is to evaluate the macro economic deed over the politicss and to analyze present nones maculation of Bangladesh. iii Table of Content NO. 01 Title page Acknowledgement go up Table of contents argument of grades List of Abbreviations Chapter-01 02 1. 1 Rationale 1. kitchen stove 1. 3 Objectives of the hire 1. 4 Methodology 1. 5 Limitations 1. 6 Organization 02 Chapter-02 writings look back 03 mental institution 3. 1 Factors touch modify straddle 3. 2 surgical operation of motive and menses FX-Regime in Bangladesh range of gross municipal product 3. 2. 1 out offshoot Unde 3. 2. 2 original Account chemical equilibrium 3. 2. 3 pretentiousness particular 3. 3 Justification of afloat(p) swap regula go 3. 4 The regeneration from glacial to Float 04 Chapter-04 Performance of move supplant invest re primary(prenominal)s On large Economy of Bangladesh 4. 1 The shell outationationing On macro Economy of Bangladesh fact 4. 2 sweetener of Workers remission 4. halt baffle 4. 4 The maturement enume l ay out of gross municipal product 13 14 14 15 7 8 8 8 9 10 10 Chapter-03 alternate lay Evolution in Bangladesh 7 conception 1 1 1 2 2 2 3 3 SECTION foliate I ii iii iv V vi iv 4. 5 Relationship among variables 05 Chapter 5 Pre pay off alternate lay out Situation Preset rallying post Situation 5. 1 wad graze motility 5. 2 Reasons for silver disparagement 5. 2. 1 High pompousness 5. 2. 2 commencement alien subscribe enthronement 5. 2. 3 job dearth Chapter 6 06 Recommendation and death 6. 1. tick off pretension 6. 2. Reduce flock dearth 6. 3 Enhancing conflicting Direct investing 6. 3 potent dandy mart primty 6. piffling Term Foreign Borrowings 6. 5 good groovy Market 6. 6 Derivatives Market 6. 7 Formation of interior(prenominal) FX Market 6. 8 Autonomy of the commutation border 07 08 References Appendix Trade deficit of Bangladesh per division replacement Position yearly entropy of Workers remit Yearly selective information of swelling Yearly entropy of Export, Remittance, carry and permuter tramp periodical info of Remittance and turn Rat sym travel planying backward Analysis 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 3. 4 3. 5 4. 1 4. 2 4. 3 4. 4 5. 1 5. 2 5. 3 5. win over calculate driving in a flash after initiation of move semblance of calendar month end genuinely Effective shift array The Export playscript in US$ The Workers Remittance The Foreign nurse Position (REER) and no.inal diversify Bangladesh GDP produce Rate Rate among cc3-2004. Exchange Rate Movement Figure Inflation Growth Rate of Foreign Direct Investment Trade 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 Authorized Dealers Asian offset commit Bangladesh argot Foreign Direct Investment Foreign Portfolio Investment Foreign Exchange financial YearGross Domestic Product globular Monetary Fund Letter of ascribe NEER OANDA REER USD Net Effective Exchange Rate Website of turn judge information. palpable Effective Exchange Rate Us buck vii Chapter 1 INTRODUCTION At the preamble of the Bangladesh bound order, 1972, it is stated that Whereas it is necessity to establish a central camber in Bangladesh to manage the monetary and substantialization ashes of Bangladesh with a view to stabilising domestic help monetary cling to and primary(prenominal)taining a competitive outside(a) par hold dear of the Bangladesh Taka toward fostering harvest-home and development of kingdoms productive resources in the case interest. To maintain a competitive external par nurture of the Bangladesh Taka, as per Foreign Exchange Regulation Act, 1947, Bangladesh avow as a central aver of the land, regulates the overseas swap on behalf of the disposal 1. 1 Rationale Exchange site expresss the global position of economic system of the republic. The spheres economic development is near cogitate with its impertinent counterchange system. Foreign give-and- impress valuate is a racy component for the countrys economic activities too. Bangladesh has been experienced the be adrift sub localize governing since May 2003 and passed a number of Pons and cons in the boilers suit miserliness. payable to the outcome outcomeance of the win over grade in the sparing, the study has been conducted in this area. 1. 2 Scope This paper covers the comparison of the crestd(p) and natation substitution political science of Bangladesh. The key factor of this paper is the evaluation of the advert of fill in place on the thoroughgoing macroeconomic indicators of the economy. Three main fundamental factors suck been identified to measure their impact with give-and-take aim. Those are export, workers remittal and outside(prenominal) rally hold back. The empirical information of 2000 to 2012 has been utilize to ustify the unit affaire. To get an idea active the Bangladeshs position, healthful-nigh neighboring countrys experience alike been compared here. 1. 2 Objectives of the study 1. To evaluate the sub site politicss in Bangladesh economy situated and Floating 2 To evaluate the drift arrangements slaying in three macro economic variables Export, Workers Remittance and Foreign modestness. 3 To understand the reason for up-to-dateness wear and tear 1 1. 4 Methodology To obtain the objectives of the study, chipary data give collected.The sources of data are Bangladesh jargon, calling card of Investment, Export Promotion Bureau, Websites of IMF, ADB, OANDA and other occupyd links. Statistical analysis correlation has been reason to understand the supplant valuates signifi derrierece on the economic variables of Export, Workers Remittance and Foreign Reserve . 1. 5. Limitations in that location were virtually limitations to conduct the study. Being, sensitive, rude(a)fo und one, problems were faced to relate with various components and linking with them. And for its very nature, primary data was non available.Since the alter station regime is a vast area, it was too contest to prepare this report within a limited meter. 1. 6. Organization in that location are six chapters in this report. Chapter I is the interpolation that divided into six sub sections. Literature Review is in Chapter 2. Exchange Rate Evaluation in Bangladesh has been covered in Chapter 3. Chapter 4 covers Performance of Floating Exchange Rate System On Macro Economy of Bangladesh. Present change prise short letter is describing in Chapter 5. The d vigorous chapter covers recommendation and conclusion. 2Chapter 2 LITERATURE REVIEW The radical constitution variables of country is remote flip straddle that ensured trade, business, long term funding, unlike direct enthronement, lump, distant swop reserve, innermost remittance and so on Various economists opin ed that the insurance form _or_ system of government of the central say system had a crucial impact on 1990s economic catastrophe. Nevertheless, it is yet to be proven either theoretically or empirically regarding the role of vary charge per unit on the indicators of macroeconomic variables. Whatever the case may be, different countries adopt different supercede identify policies.Bangladesh, the focalization of this paper, had a immovable swap prize system in place since January, 3 1972. by and by to a greater extent than 31 years, the Central camber of Bangladesh (Bangladesh coin bank) changed it into a directionless turn roll system in June 2003. Bangladesh has been pursuing a planless mass see to iting aim system since past(prenominal). Dr. Mirza Azizul Islam, the former advisor, Ministry of Finance of the Caretaker judicature of Bangladesh, presented a paper in January 2003, right before the switching from fixed to directionless regime, explaining the overall performance of the fixed regime and the probable implications of the afloat(p) regime on Bangladesh economy.He suggested that the experiences of other countries in the region show that floating regime gene rank greater un screamability in exchange judge and this sort of un certain(prenominal)ty is seeming to affect adversely the overall trade and investing climate which is already afflicted by m whatever(prenominal) unparty favorable elements in Bangladesh (See Islam, 2003). Bangladesh pursued a fixed exchange judge regime upto 1979. aft(prenominal) that, from 1979 to mid-2003, it followed a managed floating exchange locate system.Repeated first off of the home money, for maintaining a slopped real exchange order as tumesce as keeping away from overestimation of the local taka, were the prime factors for taking clean system of the orthogonal exchange system. From May, 2003, Bangladesh took virtually a new constitution know as clean floating exchange wand er policy by creating full(a) convertible underway vizorancy. But superior account convertibility is non yet do. The main reasons for all the policies that Bangladesh took were collectable to improve export lieu, decrease meaningation indebtedness with the station of improving ratio of trade.The evidences in favor of the above mentioned opinion postulate been position below. Islam( 2003) told that the regulators of the monetary policy decides the exchange rank policy of the country in order to obtain two basic goals. The first one is domestic target that covers pr reddenting flash pose of ostentatiousness, the harvest of character reference twain in organisation and Private levels, and to a fault the increase in liquidity and M2. The second reason is external target which considers conflicting exchange reserve hike up, declining current account labyrinthine sense, prevent exchange consec ordinate irritability in the countrys nter imprecate remote exchan ge trade as wellhead as ease the exchange rate current with neighboring countries like India, Bhutan, Sri Lanka, Pakistan etcetera Hossain (2005) referreing Rahman and Bayes that Bangladesh took floating exchange rate system due to (i) global conflict (ii) improve export dimensions (iii) eliminate tribute from export (iv) shrink spell squash (v) amplification the substitutes products for export. Aziz (2003) showed that check to the statements of the finance ministers for 3 ast decades, the prime receives of devaluation of taka in our country (i) rise in export(ii) reduce import(iii) improve local newborn industries (iv) heighten the inner remittances trough pursue betroth earners, and (v) increase foreign exchange reserve. As per the fiscal Sector Review(2006) of the central swear of the country, the major(ip)(ip) reasons of exchange rate policy covers (i) export promotion (ii) encourage inward remittances(iii) keeping the price level s remand, and (iv) cover a variable account situation externally.As a result, all the publications and write-ups confound illustrated two directly or indirectly the export- step-up and import reduction as the key reasons of the exchange rate policy of the country. Prior to adopting floating exchange rate regime, Islam (2003) argued that the economic and institutional prerequisites of a floating exchange rate regime are not met in Bangladesh. Some juvenile studies dally attempt to explain the behavior of nominal exchange rates of Bangladesh after its transition to the floating rate regime.By doing a correlation analysis, Rahman and Barua (2006) seek the possible explanation of the exchange rate movement. They found that in that location is a vehement correlation (-0. 40) among depreciation and export-import dislocation as a share of knotitia L/C openings for imports besides have a positive correlation (0. 45) with capriciousness of the exchange rate, which implies that the exalteder(prenominal) the L/C openings the more volatile is the exchange rate.They dissolve that high seasonal read for foreign bullion because of incr sticking out(p) import bills, domineering withdrawal of excess liquidity by Bangladesh Bank, relatively faster expansion of credit and higher interest rates on various national savings instruments are the reasons behind the interest rate hike in the money feed grocery and depreciation of the nominal exchange rate. William Miles, 2006 discussed shoe inductrs give-up the ghost the instal of exchange rate system (both fixed and floating) on the long term product in the economy.The effect of fixed rate, pegged rate and floating rate has been discussed here in brief on the basis of virtually(prenominal) lit reviews and the finding is that fixed and intermediate regimes have a clear, evidentially negative impact on growth (holds only for uphill grocery storeplaces not for industrial nations. ) In this paper, the author has given an approach to determine if exchange rate regime itself truly extracts an nonparasitic effect on growth.Results here indicate that the effect of fixed exchange rates on growth in emerging markets is not direct, but rather contingent on the existence of macroeconomic imbalances and other distortions in place in the domestic economy. These results seem to conform more closely with exchange rate theory, which posits mostly positive, and a few(prenominal) negative channels for pegged currencies to impact growth over the long electric discharge. Asad Karim Khan, June 2009 examines whether the floating exchange rate regime has several(prenominal)(prenominal) impact on the value of Bangladesh taka i,e does it make any lose on the value of the property.He shows that regime change has no statistically significant impact on the value of Bangladesh gold once foreign exchange reserve is incorporated in the regression stick. Younus and Chowdhury (2006) do an attempt to analyse Bangladeshs transit ion to floating regime and its impact on macroeconomic variables. They find that output growth in Bangladesh performed well in the intermediate and floating exchange rate regimes. Inflation is trim back in the intermediate regime disdain higher money grant and exchange rate depreciation. They also find that currency depreciation boosted export growth in the floating regime.Chowdhury and Siddique (2006) have analysed the exchange rate pass through to domestic inflation in Bangladesh. 4 The experiences of round countries in the region which implemented major changes in their exchange rate regimes in new years can provide usable lessons for Bangladesh. I have tried to focus the comparison among different economic indicators in the midst of Bangladesh and some of the South Asian Countries (Afghanistan, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka) all of which adopted in leechlikely floating exchange rate regimes.Trade and financial policy measures are very all grav e(predicate) for the countrys economy and out of that consideration, Bangladesh has taken a new exchange rate policy according to the obligations of IMF (article number VIII), as on 24th March,1994 introducing current account in full convertible. At the same time, Bangladesh was under hale since it is the member of IMF. As a result, Bangladesh took floating exchange rate system in current account on thirty-first May, 2003. After that, IMF agreed Poverty crepuscule and Growth Facility (PRGF) for our country with a new exchange rate system i,e, floating exchange rate system.However, Younus et al (2006) showed that shrive floating exchange rate system can arrange the legal community of overvaluation of local currency as it might make the export untempting in the multinational world as well as alternative items of importable goods became difficult to mo with import goods. He illustrated that the prime goal of free floating system of exchange rate is supposed to bend the main mi salignment of exchange rate, specially, to stop uncertain appreciation of real rate of exchange that might affect the requisite of the jibe export of the country.The illustrations also included the encouragement of the export situation and decline the famine of the current account, control inflationary situation, and increase the position of inward remittances. Since the independence of the country, Bangladesh is pastime an dynamic exchange rate system that has been replicated in the nominal exchange rate that were declared by the central bank of the country time to time. Islam (2003) stated 89 modifications in the exchange rate of Bangladesh currency with US one sawhorse bill since 1983 and among them, 83 were depression.Aziz (2003) illustrated 41 depreciation in nine years (1991-2000). Younus et al (2006) showed that cxxx times depreciation took place between 1972 to 2002 in Bangladesh Taka that also reduce balance of payment deficit. So, this paper, correctly identifies the exchange rate as the main grand thing for economic changes of the country. After independence, Bangladesh fixed its Takas value with British beat greatest on 3rd 1972. Since 1972 to 1990 the Taka was overvalued. So in that respect was a coarse deficit in agreement of payment that hurt the economy badly.From 1990 the scatter began to narrow scratch off. The exchange rate regime worked quite well in foothold of balance of payment, inflation, export and remittance. So there were some debate about incipience of this floating and criticism also rose about competence and readiness of Bangladesh Bank. But Bangladesh Bank performed well in managing the new born. But there is some volatility in the market in fresh past. Bangladesh Bank, as a central bank of the country put ind providentially to curve the volatility and market became stable though Taka remains undervalued.The experiences of South vitamin E and South Asian countries showed that they had to intervene in the market for smooth moving. The experience gages the Mr. Kindleberger beliefs that market work well on the whole but occasionally go forth be overwhelmed and 5 need help from a lender of the last resort. (The Economist, July 19th 2003). So the regulator should be watchful about the markets behavior and intervene when needed without hesitations. In the development country these kind of intervention should be proactive rather than reactive.Naeem and Rasheed analyse another(prenominal) important issue of whether hackneyed prices and exchange rates are related or not has received considerable attention after the East Asian crises. They s economic aid that during the crises the countries impact saw turm rock oil in both currency and conduct markets. If stock prices and exchange rates are related and the source runs from exchange rates to stock prices accordingly crises in the stock markets can be prevented by controlling the exchange rates. Moreover, developing countries can exploit suc h a link to attract/stimulate foreign portfolio enthronisation in their own countries.Similarly, if the source runs from stock prices to exchange rates then authorities can focus on domestic economic policies to stabilize the stock market. If the two markets/prices are related then investors can use this information to predict the behavior of one market utilize the information on other market. They also claimed that most of the empirical literature that has examined the stock prices-exchange rate relationship has focused on examining this relationship for the developed countries with very comminuted attention on the developing countries.This paper will assess whether the exchange rate regime change indeed has created any significant impact on the economy of the nation as well as the comparative analysis with the neighboring countries situation. on that point are some potentialities as well as difficulties in market ground system, so in this study there are some recommendations for the regulator and for the market players. To manage the floating exchange rate, full automation as well as transparency is essential in banking sector. As the swell account of our economy is not convertible there is little electron orbit of great flight.If the inception of floating exchange rate is the beginning to liberalize jacket account promptly that wont be a wise decision. 6 Chapter 3 Exchange Rate Evolution in Bangladesh Introduction The world economy experienced some sort of fixed and ductile exchange rate. onward 1875 there was Bimetalism of exchange rate and then the capital Standard (1875-1914). During Interwar flow (1914-1944) the classical sumptuous Standard broken down and in July 1944 representatives of 44 countries succeeded to establish the Bretton Woods system.Again the oil shock in the early mid-seventies and the dampen of admit broken down this system and world economy shifted to flexible exchange rate. Bangladesh has been experienced two major e xchange rate regimes since the countrys Independence from 16th declensionember1971. A Fixed Exchange Rate Regime from 1972 to 1979 and a Floating Exchange Rate Regime since May 2003. Among the time frame from 1971 to 2003, there were different exchange rate arrangements in terms of the currency mechanism, like Pegged to Pound Sterling (? 1972-1979Pegged to a basket of major trading partners currencies(? as the intervening currencies)1980-1982Pegged to a basket of major trading partners currencies(US$ as the intervening currencies)19831999Adjusted Pegged System2000-2003Floatig Exchange Rate System May 30, 2003Present. both the policies of exchange rate system Bangladesh implemented, with the objectives of accelerating exports, cut import pressure and improve the balance of trade. After independence, Bangladesh fixed its Takas value with British Pound Sterling on 3rd 1972.Since 1972 to 1990 the Taka was overvalued. So there was a huge deficit in equalizer of payment that hurt the economy badly. From 1990 the go began to narrow down. The exchange rate regime worked quite well in terms of balance of payment, inflation, export and remittance. 3. 1 Factors Affecting Exchange Rate Under Floating Exchange Rate Arrangements Exchange Rate is primarily resolved by demand for foreign currency and Supply of foreign currency where demand and tack on of foreign currency is also affected by some other sensitive factors.According to Jeff. Madura, ( worldwide Financial Management) theoretically demand for foreign currency is determined by several factors like, import payments, run payments which includes income payments, debt service payments, foreign coronation (outward) and foreign investment (outward). The supply of foreign currency is composed of export Receipt, service receipts which includes income receipts, debt service receipts, foreign aid (inward) and foreign Investment (inward).Besides those some other factors affect the exchange rate movements. The factors are a)Purchasing Power affinity b)Interest rate parity c) Relative income differential d)Government Control e)Expectations etc. 7 3. 2 Performance of anterior and current FX-Regime in Bangladesh To evaluate the performance of Bangladesh considering the two different exchange rate regimes, some data comparison have been made among three neighboring countries in South Asia. Those are India, Pakistan and Sri Lanka. 3. 2. Growth rate of GDP Comparing the percentage of growth rate with major neighboring Countries, the spare-time activity table shows that Bangladesh was more or less in a similar situation before the adoption of floating exchange rate regime. Since 2003 with the new floating exchange rate system, there is also a positive track of the GDP growth rate except 2009-2010. The global recessional affect the overall growth of the country at that time. Table 3. 1 Growth rate of GDP (% per year) Y ground Banglades h India Pakistan Sri Lanka 2001 5. 3 5. 8 1. 8 -1. 5 2002 4. 4 4. 0 3. 1 4. 0 2003 5. 3 8. 2 5. 1 5. 9 2004 5. 7 7. 4 5. 5 5. E 2005 A 2006 R 200 7 6. 4 9. 2 6. 8 6. 8 6. 0 6. 6 7. 6 9. 7 5. 8 5. 8 5. 5 7. 7 200 8 6. 2 6. 7 3. 7 6. 0 200 9 5. 7 8. 0 1. 2 3. 5 2010 5. 8 8. 6 4. 1 7. 6 2011 6. 3 8. 2 2. 5 8. 0 etymon Asian reading brain-2004 and 2011, ADB 3. 2. 2 Current Account Balance In comparison to other major South Asian countries, the table no. -2 shows that Bangladeshs achievement in terms of containing current account balance is snap off after the adoption of floating exchange rate regime (since 2003). It has done consistently better than some of the neighboring countries like Sri Lanka, Pakistan, and India in all recent years excepting 2005.Table No. 3. 2 Current Account Balance as Percentages of GDP Y 2003 0. 5 0. 7 5. 9 -2. 2 E 2004 0. 0 0. 3 3. 0 -3. 0 A 2006 1. 3 -1. 2 -3. 9 -5. 3 R 2007 1. 4 -1. 4 -4. 8 -4. 3 Country Banglades h India Pakistan Sri Lanka 1999 -1. 5 -1. 1 -3. 0 -3. 6 2000 -1. 1 -0. 8 -0. 4 -6. 4 2001 -2. 3 0. 2 0 . 6 -1. 5 2002 0. 4 0. 8 4. 6 -1. 8 2005 -1. 5 0. 3 2. 1 -3. 5 2008 0. 9 -2. 4 -8. 5 -9. 5 2009 2010 2. 7 3. 7 -2. 8 -5. 7 -0. 5 -3. 0 -2. 2 -3. 8 2011 0. 2 -3. 5 -1. 7 -4. 0 start Asian Development Outlook-2011, ADB 8 3. 2. Inflation Situation Exchange rate regime and inflation are germane(predicate) because a change in the exchange rate is almost certain to cause a change in the domestic price of tradable and indirectly the price of non-tradable also. The international scrap of the economy is badly gnaw by inflation. It generally encourages capital flight, exacerbates income distribution, gives rise to inequities in income distribution and aggravates poverty. The relevant data are presented in the following table no. -3. Table 3. 3 Inflation in Bangladesh and Selected South Asian Countries Y 2002 200 3 2. 8 4. 4 3. 4 3. 5 10. 2 5. 3 3. 1 2. 6 E 200 4 4. 5. 0 4. 0 A 2005 5. 2 5. 0 6. 2 2006 7. 2 5. 2 7. 9 10. 0 R 200 7 7. 2 5. 0 7. 8 15. 8 Country Banglades h India Pakistan Sri Lanka 1999 8. 9 3. 3 5. 7 5. 9 2000 3. 4 7. 2 3. 6 1. 2 2001 1. 6 4. 7 4. 4 11. 0 200 8 9. 9 8. 7 12. 0 22. 6 200 9 6. 7 2. 1 20. 8 3. 4 2010 7. 3 9. 2 11. 7 5. 9 2011 8. 0 7. 8 16. 0 8. 0 writer Asian Development Outlook-2011, ADB It is showing that there is an increase make out of inflation since the adaptation of floating exchange rate regime. Data on inflation rates represent detail averages. Except for India, which reports the in large quantities price index, inflation rates presented are based on consumer price indexes.The higher inflationary situation take place due oil and food price hike in the international market as well as several natural disaster like, Sidor, flood etc. 3. 3 Justification of Floating Exchange Rate From the above mentioned data analysis, it can be said the previous regime performed quite well in certain criteria. The major reasons behind the adoption of new exchange rate system is principally the governments commitment to the liberalisation of the countrys economy and to take the appropriate steps to create suitable environment of the economy for entering into capital account convertibility regime.Rather than this, there was IMFs conditionalities to enter into new floating exchange rate regime. 3. 4 The transmutation from Fixed to Float To gratify up the economic demand and to fulfill the IMF conditionality, on 29 May, 2003 Bangladesh Bank issued a circular stating- effective from 31st May, 2003, Bangladesh Bank floated its exchange rate and followed a in full market based exchange rate for Taka. Under this arrangement, exchange rate is determined on the basis of demand and supply of the respective currencies.Immediately after the inception of floating exchange rate banks, economists, currency traders and businessmen have welcomed the deregulation of the exchange rate saying that 9 the countrys foreign trade and remittance would get a bodge up due to it and it would make the currency market more efficient and effective. Since the grounding there is no unusual inflame of exchange rate till mid 2004. Most of the time Taka maintains appreciating position during this period and Bangladesh Bank show a wonderful performance managing the new born exchange rate system.During mid 2004, Taka faced significant volatility against USD and it continued up to direful 2004. After that period, the volatility of exchange rate of Taka against USD eased but resulting to appreciated USD till mid January 2005. In recent times, Taka has depreciated significantly against USD in the inter-bank market. This has happened as because of price hike in oil price and scrap vas in the international market created a surge on import settlements. Figure3. 4 Exchange Rate Movement immediately after inception of Floating Exchange Rate Movment 58. 7 58. 65 58. 6 58. 55 58. 5 58. 45 58. 4 58. 35 58. 3 58. 25 58. Exchange Rate 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 semen Bangladesh Bank unpublished Data Behavior of Real Effective Exchange Rate (REER) and titular Exchange Rate REER is considered as a guiding FX-rate to the policy maker as well as the market participants and it also shows the international competitiveness of countries goods and services. The policy makers are always tried to keep the token(a) Exchange Rate near to the REER. Before 1990 Taka was overvalued (see table no-01,02 and 03. that distorted our international competitiveness and that was the causes of prolonged Balance of Payment crisis. Figure3. 5 Comparison of month end Real Effective Exchange Rate (REER) and nominated Exchange Rate between 2003-2004. 10 July-31 62. 00 61. 00 60. 00 Behavior of REER and tokenish FX-Rate Rate TK/$ 59. 00 58. 00 57. 00 56. 00 55. 00 54. 00 REER-2003 53. 00 Nominal TK/$-2003 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec REER-2004 Nominal TK/$-2004 Months Source Bangladesh Bank Unpublished Data Aft er 1990, Taka remained undervalued. The gap between Nominal Exchange Rate and REER were widened over the period.Before inception of floating exchange rate Taka was almost running on a free float for the last 12-15 month as rates were decided according to demand-supply situation and liquidity in market. Bangladesh Bank was also not virtually change any dollar that time. This means the market has already factored in floating exchange rate. Moreover, before inception Bangladesh Bank took some measures for strengthening regulation, such as, keeping close observation of Authorized Dealers (ADs) daily activities especially on well-defined Position, gave pressure for reconciliation of NOSTRO account balance, encourage every bank to set up dealing room and ressurized to make payment in due time etc. So we can plainly say that way to the floating exchange rate was prepared. 11 Chapter 4 Performance of Floating Exchange Rate System On Macro Economy of Bangladesh Introduction of floating ex change rate was problematic issue and also there were some criticisms about the competence of Bangladesh Banks from some corner. But Bangladesh Bank performed a tremendous performance. There was no volatility no supposal in price and market behaves rationally. If we consider the market statistics, we find that macro economic variables have positive performances over the period of time.Three major variables have been considered for evaluating the impact of exchange rate with them. The variables are Export, Workers Remittances and Foreign reserve. 4. 1 The Export Situation The export movement from 1998 to 2011 shows an increasing trend. It is shown here that there is up(a) trend of export after 2003,i. e, after adopting the floating exchange rate regime, the export has a robust growth in the economy. Figure4. 1 The Export hatful in US$ Source Bangladesh Bank Quarterly, January-March 2011 During the global recession, the export trend of Bangladesh was not that much affected mostly for the RMG sector.In the FY 09 and FY 10, the export volume increase significantly. 4. 2 Enhancement of Workers Remittance The Inward remittances from Bangladeshi nationals working(a) abroad remained untouchable in FY10 even in the face of global economic slowdown and continued to play an important role in strengthening the current account. Receipts on this sector increase by 13. 4 percent to USD 10987. 40 meg in FY10 from USD 9689. 26 jillion in FY09. The underlying reason was that Bangladesh Bank has simplified the approval policy of outline arrangements between foreign exchange houses and domestic banks.As a result, 40 banks 12 have been allowed for establishing 885 drawing arrangements with 300 exchange houses all over the world for collecting remittances, (of which well-nigh 650 drawing arrangements with 250 exchange houses are operational now). Figure-4. 2 The Workers Remittance Source Bangladesh Bank Quarterly, January-March 2011 Considering the growth rate of worker s remittances, it has been observed that the rate is quite higher after the free floating exchange rate regime that is 20. 52 % (2003-2010) than that of fixed exchange rate regime of Bangladesh which is metrical as 11. 9% (19932002). The increasing amount of workers remittance helps to balance the trade deficit in a prudent manner. 4. 3 Reserve Position The amount of foreign exchange reserve has been increased significantly over the last cope with of years. During the FY 2003 to FY 2005, the trend was quite regular and flat. But, it has an upward trend after FY 2007. The main sources of foreign reserve are workers remittance, foreign loans and grants and exports. 13 Figure-4. 3 The Foreign Reserve Position design Reserves($) 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 469. 6 2705 2930 3483. 8 5077. 2 6148. 8 7470. 9 10749. 7 10911. 6 Source Bangladesh Bank Quarterly, January-March 2011 After the inception of floating exchange rate re gime, the foreign exchange reserve boosted up due to huge amount of workers remittance and increasing trend of export. 4. 4 The Growth Rate of GDP The GDP growth rate reaches upto 6. 7% during FY 11. From 1994 to 2010, the average growth rate of GDP was 5. 47% compass at high of 6. 63% in June 2006. The record low rate was 4. 08% during June 2004. For the last couple of years the growth rate was 5% above and Bangladesh is onsidered as a developing country. Figure-4. 4 Bangladesh GDP Growth Rate Source Bangladesh Bureau of Statistics,2011 14 4. 5 The relationship among the variables The relationship between the exchange rate and three variables i,e, export, remittance and reserve reflects quite positive in correlation. The correlation has been computed considering the data from 2002-2011. Correlation Exchange Rate Export 0. 928315219 Remittance 0. 859373146 Reserve 0. 825444493 One regression analysis has been done with workers remittance and exchange rate.The purpose of the quantit ative analysis is to identify if there is any relationship between exchange rate and workers remittance of Bangladesh. The monthly data of workers remittance from the financial year 2007-2008 to financial year 2011-2012 has been taken for the calculation. The regression model, exchange rate is independent variable and remittance is dependent variable. The regression model is Y=66. 15+. 010385 remittance The value of R unbowed is . 37 which means that the regression model explains 37% variation in exchange rate. The coefficient is very low which is and P value is quite high that is 3. 74.So, the remittance does not show any significant impact on foreign exchange rate. 15 Chapter 5 Exchange Rate Situation 5. 1 Exchange Rate Movement In the recent Taka depreciates against US$ drastically Over the period, July 2010-January 2012, from Tk 70 to Tk 86 a depressing 23% fall down. Figure-5. 1 Exchange Rate Movement Source Website OANDA The discerning fall of taka against US dollar continu es for last couple of months. US dollar has been weakening against many other strong currencies like Euro, SF, Yen and GBP but getting stronger against Bangladesh Taka. Exchange rate depreciation creates the economy in a challenging situation. persisting depreciating style higher the inflation rate that ultimately increase the trade deficit. The ongoing depreciation of Bangladeshi taka is change state the challenge for the central bank as well as the Government. The increasing trend of the trade deficit (figure 7) also shows the possibility of the shortage of supply of the foreign currency i,e, US$ in the market. 5. 2 Reasons for Currency Depreciation The reasons behind the currency depreciation are influenced by economic fundamental, exchange rate regime and Trading rules. There is a slow trend of capital influx in the country for the last couple of years.The main reasons for that are low tendency of foreign direct investment and increasing trend of trade deficit. 16 5. 2. 1 Hig h Inflation Inflation is show as a major bane in the economy in the recent past. Inflation had a moderate trend upto 2003 within 6%. It started increasing from 2004 and got sharp rise in 2008-2009 and the increasing trend is still continuing. The main cause of high inflation in Bangladesh is oil and food price hike in abroad. Figure 5. 2 Inflation Source monthly scotch Trend-Bangladesh Bank, January 2012 The high level of inflation in the economy extends to lower the value of local currency taka.To cover the deficit budget, Government acceptances from the Central Bank (BB) and overall money supply increased leads to high inflation in the market. 5. 2. 2 Low Foreign Direct Investment The growth rate of foreign direct investment is showing a declining trend. The data has been used from 1996 to 2011. After 1998 and so on, the trend started to decline sharply. It increased a little bit during 2004-2005 but again has a very declining trend. 17 Figure-5. 3 Growth Rate of Foreign Dire ct Investment Source periodical Economic Trend-Bangladesh Bank, January 2012 In the recent past, the FDI growth rate is severely low.So, proper steps are supposed to be taken by the government authority. 5. 2. 3 Trade Deficit Though the export volume has an increasing trend since the inception of floating exchange rate regime, there is huge amount of trade deficit with an increasing trend. 18 Figure 5. 4 Trade Deficit of Bangladesh Source periodical Economic Trend-Bangladesh Bank , January 2012 The amount of import has been increased sharply after 2006-2007. The gap between export and import becomes huge during the last financial year 2010-2011. collectable to huge import payment, government debt has increased significantly in the country and demand for foreign currency increased. 9 Chapter 6 Recommendations and Conclusion Considering the above mentioned discussions, some recommendations have been formulated in order to bring stability in the foreign exchange market in the short run and long run for the Government and Bangladesh Bank i,e, the central bank of the country. Those are discussing as follows 6. 1. Control Inflation Effective measures are needed to be taken by the central bank to control inflation by bring down money supply in the economy. The formulation of the tighten monetary policy by the central bank is an important factor for controlling inflation.But the deficit budget of the Government creates huge Government Debt and prolong inflationary atmosphere. The related factors for reducing deficit budget 6. 2. Reduce Trade Deficit One of the important components to reduce the trade deficit is to heighten export volume of goods and services. Bangladesh is a import depended country. The main importable items are petroleum and food. Local industrial enterprise is utmost important specially in the food sector (substitute food items production) and other exportable items to reduce huge liability of the Government. 6. 3 Enhancing Foreign DirectInves tment Sufficient inflow of foreign direct investment could enhance the capital inflow in the country for long term. Bangladesh Government has specific policy for inviting FDI. Ensuring good governance, Infrastructural development, Utility, political stability will help to promote more investment from abroad in the country. 6. 4 Short Term Foreign Borrowings Borrowings from abroad is another option for supplying liquidity in the market. But the problem of short-term borrowing is that the country may fall into Debt-trap due to be unable to pay the money on time.Once the foreign currency injects in the market, it is difficult to recollect form the market as well. The Central Bank of Philippines in early 1990 can be remembered here. Due to short-term borrowing to meet the local market demand, got huge foreign liability. Continuous losses eroded its capital base and made it bankrupt in 1993. It took 25 years to reestablish the new central bank in that country. So, or else of foreign bo rrowings, Concessionary loans at a low interest rate from World Bank and ADB and other bilateral donors might be a better option to meet the ongoing gap in the market. . 5 Effective Capital Market The capital market development is utmost important in order to bring the steady situation in FX market. Ensuring enough flow of Foreign Portfolio Investment (FPI), good governance and security in the capital market is time demand. 6. 6 Derivatives Market Introduction of various derivative products as options, currency swap, interest cap, interest swap, futures, forwards etc, as well as ensuring huge portfolio investment might bring the positive impact in the exchange rate market. 20 6. Formation of Domestic FX Market A formal forex market forum should be created, with the participation of independent professional bodies and with design from the dealers association, Bangladesh Bank and other relevant government officials. This forum would provide the logistic support and platform for the f orex market. Ideally, this forum would develop a secured web-based market to which only the members or move organizations would have access. From this website, all the logistic support required for completing the forex dealings among the members/ act organizations could be provided. 6. Autonomy of the Central Bank The autonomy of the central bank is sought after issue for the economy. The central bank should execute and perform independently with full automation. Conclusion This study shows that floating exchange rate regime has constructive effect on economic growth. The transition period from Fixed rate regime to Floating rate regime was quite smooth and stable. There is significant growth in the fundamental economic variables on the long path of the new exchange rate regime. The trend of export, workers remittances and foreign reserves have been analyzed and found considerable growth on these variables.Nevertheless, the ongoing exchange rate depreciation along with high inflat ion is becoming a challenging issue for the regulators and Government as well. The gap between demand and supply of foreign currency in the market is getting bigger in the high inflationary economy which lead continuous loses in the value of the local currency. The key reasons have been found for the currency depreciation are inflation, government debt, trade deficit, low FDI etc. The study recommended some issues for Governments and Centrals banks part. The regulation should be proactive rather than reactive.There are some potentialities in this new regime to string this potentiality, Government as well as regulators should take effective steps. 21 REFERENCES Asian Development Bank. 2011. Asian Development Outlook 2010 Update. Asian Development Bank. 2006. Asian Development Outlook 2005, ADB Manila, Philippines. Asian Development Bank. Manila,Philippines. 2005. Asian Development Outlook 2005, ADB Asad Karim Khan Priyo, June 2009,Impact of the Exchange Rate Regime Change on the Val ue of Bangladesh Currency. Bangladesh Bank yearbook fibs. 2010.Dhaka Bangladesh. Bangladesh Bank Monthly Economic Trend. January 2012 Bangladesh Bank, Scheduled Bank Statistics. July- kinsfolk 2011. Financial Sector Review, 2006, Bangladesh Bank. Hossain, Akter. 2002, Exchange Rate, Capital flows and International Trade. Hossain, M. A. , and Alauddin, M. , (Fall 2005), Trade Liberalization in Bangladesh The Process and Its Impact on Macro Variables Particularly Export Expansion, The Journal of growth Areas, Volume 39, Issue 1, 127-150. Jeff. Madura, International Financial Management, 10th edition. Islam, Mirza A. 2003) Exchange Rate Policy of Bangladesh Not Floating Does Not entertain Sinking, Keynote Paper presented at dialogue organized by core group for Policy Dialogue, Bangladesh January 2, 2003. Nusrate Aziz . June 2008. The Role of Exchange Rate in Trade Balance Empirics from Bangladesh. The IMF, Annual Report 2010, Financial operations and transactions, The Internatio nal Monetary Fund. Younus, S. and Chowdhury, M. I. , ( declination 2006), An Analysis of Bangladeshs Transition to Flexible Exchange Rate Regime, functional Paper Series. 22 APPENDIX I Trade Deficit of Bangladesh Export entailment Year (in million USD) (in million USD) 1994-95 3472. 5250. 6 1995-96 3882. 4 6237. 9 1996-97 4418. 3 6436. 8 1997-98 5161. 2 6768. 0 1998-99 5312. 8 7205. 4 1999-00 5752. 2 7536. 6 2000-01 6467. 3 8401. 5 2001-02 5986. 1 7686. 0 2002-03 6548. 4 8691. 8 2003-04 7603. 0 9812. 9 2004-05 8654. 5 11832. 1 2005-06 10526. 2 13271. 7 2006-07 12177. 9 15441. 0 2007-08 14110. 8 19481. 4 2008-09 15565. 2 20291. 4 2009-10 16204. 7 21388. 2 2010-11 22928. 2 32398. 4 Source Monthly Economic Trend-Bangladesh Bank , January 2012 Trade Deficit (in million USD) -1778. 1 -2355. 5 -2018. 5 -1606. 8 -1892. 6 -1784. 4 -1934. 2 -1699. 9 -2143. 4 -2209. 9 -3177. 6 -2745. 5 -3263. 1 -5370. -4726. 2 -5183. 5 -9470. 2 23 Yearly Reserve Position In million USD Reserves($) Period 20 02-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Source Monthly Economic TrendBangladesh Bank , January 2012 2469. 6 2705 2930 3483. 8 5077. 2 6148. 8 7470. 9 10749. 7 10911. 6 24 Yearly data of Workers Remittance Remittances Year/Month 2011-2012* 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 1999-2000 1998-1999 1997-1998 1996-1997 1995-1996 1994-1995 1993-1994 1992-1993 In million In million US dollar Taka Growth Rate 2117. 7 11650. 32 10987. 4 9689. 26 7914. 78 5998. 47 4802. 41 3848. 29 3371. 97 3061. 97 2501. 13 1882. 1 1949. 32 1705. 74 1525. 43 1475. 42 1217. 06 1197. 63 1088. 72 944. 57 157668. 7 829928. 9 760109. 59 666758. 5 542951. 4 412985. 29 322756. 8 236469. 7 198698 177288. 2 143770. 3 101700. 1 98070. 3 81977. 8 69346 63000. 4 49704 48144. 7 43549 36970. 4 Average Rate Growth 13. 39772078 22. 41982721 31. 94664639 24. 90541207 24. 79334977 14. 12586707 10. 12420109 22. 42346459 32. 8903884 -3. 448382 14. 28001923 11. 82027363 3. 389543316 21. 22820568 1. 622370849 10. 00349034 15. 2609 20. 51706112 11. 89409131Source Foreign Exchange Policy Department, Bangladesh Bank Bangladesh Bank Annual Report 2009-2010 Growth rate is self calculated 25 Yearly data of Inflation Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Point to Point 1. 66 3. 58 5. 03 5. 64 7. 35 7. 54 9. 2 10. 04 2. 25 8. 7 10. 17 11. 59 12 months average 1. 94 2. 79 4. 38 5. 83 6. 48 7. 16 7. 2 9. 94 6. 66 7. 31 8. 8 10. 91 Source Monthly Economic Trend-Bangladesh Bank , January 2012 26 Yearly data of Export, Remittance, Reserve and exchanger Rate (In million USD) Workers Year FX Rate Export Remittance in mil US$ (in mil US$) 62. 691 2501. 13 FY02 5985. 89 63. 2216 3061. 97 FY03 6548. 54 64. 0869 3371. 97 FY04 7602. 99 68. 0508 3848. 29 FY05 8654. 52 73. 9865 4802. 41 FY06 10526. 16 74. 1681 5998. 47 FY07 12177. 86 73. 4636 791 4. 78 FY08 12685. 4 73. 8228 9689. 26 FY09 14170. 7 74. 5518 10987. 4 FY10 14763. 8 79. 1877 11650. 32 FY11 20313. 8 Source Monthly Economic Trend-Bangladesh Bank , January 2012 Reserve (in mil US$) 1582. 9 2469. 6 2705 2930 3483. 8 5077. 2 6148. 8 7470. 9 10749. 7 10911. 6 27 Monthly data of Remittance and Exchange Rate Year Month Remittance ( In million USD) Ex rate (average) Year Month Remittance ( In million USD) Ex rate (average) 007-08 2008-09 2009-10 July August kinsfolk October November December January February March April May June July August folk October November December January February March April May June February March April May June July August September October November December January February March April May 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. 3 850. 5 784. 47 885. 67 840. 99 895. 3 850. 5 885. 38 935. 15 887. 57 900 . 70 1050. 4 873. 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 May 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 Source Monthly Economic Trend-Bangladesh Bank , January 2012 Regression Analysis Exchange Rate and Rem ittance SUMMARY yield Regression Statistics Multiple R R square toes Adjusted R Square Standard Error Observations 0. 610778 0. 373049 0. 360993 2. 020275 54ANOVA df Regression difference Total 1 52 53 SS 126. 2866232 212. 2385435 338. 5251666 Standard Error 1. 622261594 0. 001867047 discredit 95. 0% 62. 90219774 0. 006638903 Upper 95. 0% 69. 41280968 0. 014131912 MS 126. 2866 4. 08151 F 30. 94114904 Significance F 9. 36275E-07 Coefficients Intercept X Variable 1 66. 1575 0. 010385 t Stat 40. 78103 5. 562477 P-value 3. 7402E-41 9. 36275E-07 Lower 95% 62. 90219774 0. 006638903 Upper 95% 69. 41280968 0. 014131912 2 FOREIGN DIRECT INVESTMENT (FDI) INFLOWS AND STOCKS BY COMPONENTS IN BANGLADESH (In million US$) Inflows Period 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 Source Stocks Total 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. 4 411. 41 381. 33 768. 69 285. 03 483. 66 960. 59 602. 65 357. 94 913. 02 342. 22 570. 80 lawfulness 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 Earning 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 4. 44 145. 53 60. 28 85. 25 98. 75 86. 94 11. 81 47. 24 12. 28 34. 96 25. 29 16. 55 8. 74 88. 56 22. 59 65. 97 66. 78 50. 70 16. 08 Equity 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 Earning 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 Total 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 Department, Bangladesh Bank. 342. 52 436. 52 5196. 21 5143. 70 533. 65 612. 69 342. 21 462. 67 6072. 07 6219. 06 3