## Exchange Rate Responses to Inflation in Bangladesh

_IMF Working Papers, October 1, 2002_

## Source details

**Canonical URL:** [Exchange Rate Responses to Inflation in Bangladesh](https://www.imf.org/en/publications/wp/issues/2016/12/30/exchange-rate-responses-to-inflation-in-bangladesh-15959)

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## Bibliographic details
- Authors: Akhtar Akhtar Hossain
- Published: October 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451858112.001

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### Scope and data
- Period covered: 1972-73 to 1999.
- Data frequency: both annual and monthly data were used.
- Exchange rate measure: decline in the value of the currency in terms of the trade-weighted nominal effective exchange rate.
- Study type: IMF Working Paper by Akhtar Akhtar Hossain (published October 1, 2002).

### Key findings
- Past consumer price inflation generally led to currency devaluation.
- The effect of inflation on devaluation became weaker following the financial reforms undertaken in the early 1980s.
- The effect of devaluation on inflation was not significant.
- The non-significant effect of devaluation on inflation remained robust throughout the sample period.

### Analytical emphasis
- Investigates directionality between inflation and exchange rate movements (inflation → devaluation versus devaluation → inflation).
- Uses both annual and monthly observations to test persistence and robustness of relationships.

### Robustness and temporal variation
- The inflation → devaluation relationship is present over the full sample but shows a structural weakening after early-1980s financial reforms.
- The devaluation → inflation relationship is consistently non-significant across the entire 1972-73 to 1999 sample.

*Akhtar Akhtar Hossain, "Exchange Rate Responses to Inflation in Bangladesh", IMF Working Papers 2002, 166 (2002), DOI: https://doi.org/10.5089/9781451858112.001*

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## Content in this bundle

- **Exchange Rate Responses to Inflation in Bangladesh - WP/02/166**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/exchange-rate-responses-to-inflation-in-bangladesh-15959_