Evolution of exchange rate regime: Impact of macroeconomy of Bangladesh

Abstract

Bangladesh has experienced two distinct exchange rate regimes: a fixed exchange rate system from January 1972 to May 2003 and a floating one since June 2003. After adopting the floating exchange rate regime, Bangladesh positively impacted macroeconomic development. The key macroeconomic variables considered include foreign reserves, worker's remittances, and export proceeds. However, ongoing challenges for the country include the depreciating trend of the local currency within a highly inflationary economy. This paper aims to evaluate macroeconomic performance across the two regimes and analyze the current currency situation in Bangladesh.