Exchange Rate Policy in Bangladesh: a Review of Key Concepts and Issues

transposition footstep Policy in Bangladesh: A reexamine of Key Concepts and Issues ----------------------------------------------------- In an open and deregulated economic environment, exchange grade can play an important role in macroeconomic management for stability and growth. The increasing role of exchange rank since the early 1970s has indeed been a break from the Bretton woods tradition of the 1950s and 1960s that assigned a especial(a) role for exchange range in economic affairs. However, the banking and bills crises of the 1990s that afflicted many evolution countries in variant regions have provided a somber lesson that in a world(a) economic setting, exchange rate insurance policy, and monetary and financial policy more broadly, cannot be treated in a telephone circuit as usual fashion. This is more so for countries, which have developing financial systems, poor governance but open hood accounts. The stake is indeed high because the way an emerging market economy conducts its exchange rate policy does have a profound impact on its current and future macroeconomic performance.

As the experiences of various countries in Asia, Africa and Latin America suggest, economic, complaisant and political costs of mis-aligned real exchange rates, policy-induced or structural, could be formidable (Edwards, 1989; Ghosh, Lane, Schulze-Ghattas, Bulir, Hamann and Mourmouras, 2002). Therefore, it becomes a vital policy issue to tell apart an exchange rate system that is compatible with a developing economys characteristics and needs. I. Exchange Rate Policy and Exchange Rate Management In the simplest sense, exchange rate policy addresses the management of rates at which the domestic currency is converted to another currency(ies) by a public agency such as a central bank. These rates can be converted at a fixed rate or a go(changing) rate. Exchange rate policy is managed in one of two ways: through a fixed rate or through a floating rate. Management, under a floating exchange rate system,... If you wish to get a full essay, order it on our website: Orderessay

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