State of the Bangladesh Economy in FY2023-24 (First Reading)
Independent Review of
RBD
Bangladesh's Development
Move toward market aligned exchange rate
a
☐ CPD's May 2023 analysis indicated that there was
significant gap between the prevailing exchange rate (of USD
1 = BDT 104.0) and the equilibrium (high bound) rate, which
would require a further depreciation of the BDT in the range
of 15%. Since then, BDT has been depreciated by about 8.0%.
☐ The Bangladesh Bank has been gradually depreciating the
BDT and the difference between NER and REER has come
down significantly. There appears to be space for further
depreciation as indicated by the prevailing difference between
the multiple official formal as also these and the kerb market
rates.
Figure 5.2: REER vs NER vs
NEER in Bangladesh
180
160
140
120
100
80
60
NEER
REER
NER
2000
2002
2004
2006
2008
REER vs NEER vs NER (Bangladesh)
REER
2010
2012
2014
2016
2018
NER
►NEER
2020
Jan-22
REER
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Source: Extracted from Bruegel (2023)
and World Bank (2023).
NER
NEER
Jan-23
Mar-23
CPD (2023): State of the Bangladesh Economy in FY2023-24 (First Reading)
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