Strategic Determinants and Stability of Real Exchange Rate in Bangladesh

Abstract

The lesson has been accompanied to scrutinize the determinants of exchange rate In Bangladesh economy for the period from 1976 to 2017. The broad objectives of this study is to analyze what are the determinants of Real Exchange Rate and Stability scenario that touch the inflation rate and overall economy in Bangladesh since 1976 to 2017. Real Exchange Rate, Inflation Rate, Interest Rate and Income Level or Real GDP is used as clarifying variables. These are the utmost central factors of exchange rate which have a key influence on Real Exchange Rate. This study’s inference includes how the Inflation Rate, Interest Rate and Income Level or Real GDP has impact on Real Exchange Rate. It is evident from the study found that still there have been long run relationship among real exchange rate, interest rate, inflation rate and real gross domestic product. Paper also shows that if interest rate, inflation rate and real GDP go down then at a time the real exchange rate goes down.