Determinants of Exchange Rate in Bangladesh: A Case Study

Abstract

The study has been conducted to analyze the determinants of exchange rates in Bangladesh economy for the period of 1990 to 2011 using simple single equation linear regression model (SELRM). Inflation rate, GDP growth rate, interest rate and current account balance is used as explanatory variable. These are the most important determinants of exchange rate, which have major impact on exchange rate. Our conclusion includes that inflation rate, GDP growth rate, interest rate and current account balance has positive impact on exchange rate and the major role played by GDP.

Keywords: Exchange rate, Inflation rate, GDP growth rate, Interest rate, Current account balance

JEL Classification: G10