Internet Browser Essay Example for Free

Internet Browser Essay Despite the fact that Internet Explorer 5. 5 is one of the most popular in companies, I’d like to recommend another one – Maxthon Browser 2. 0, because it is much more convenient for office working. Maxthon Internet Browser 2. 0 is a powerful tabbed browser nowadays. Its main advantage is a highly customizable interface. Although Maxthon Browser is based on the engine of Internet Explorer, it has many additional efficient features. What works in Internet Explorer works as well in Maxthon Browser and even better and faster. (Maxthon). Maxthon Browser includes many new features involving full customization of layout, new clean interface, multi-tab workspace, better security and improved rss/podcast reader. Until nowadays a big inconvenient was: bookmarklet, toolbar and 3rd party plugins. Maxthon 2. 0 supports all of the functions compared with Internet Explorer, Opera, etc. Additionally Maxthon has few exclusive screenshots below. Nevertheless the most interesting feature of new Maxthon is its possibility to create an account and to store all necessary information and settings online. The function is simply used just by logging in. Although Opera, Internet Explorer and FireFox are more sophisticated and have got more market share, Maxthon is swiftly gaining popularity. (Maxthon) Today is the era of Internet and application functionality is able to expand beyond the operating system into the desktops and the web. Personalization and delivery is very important and Maxthon Browser with its organic growth is a serious representative of such trend. In several years Maxthon will become a key player in the Internet market, because it has serious investors such as Morten Lund, CRV, and WI Harper, growing community and actually beautiful product. I recommend Maxthon, because it differs from other browsers and makes working process with Internet easier as it includes the visible gestures and customizable Tab handling. But the most useful is if the browser is closed accidentally with ten tabs open, the next time it is opened, they are still there. (Maxthon). References â€Å"Maxthon: the Browser that Rocks†. (2006, February 28) Retried September, from http://www. techcrunch. com.

Significance of Security Testing

Significance of Security Testing Premalatha Sampath Abstract Software security testing is an essential means which helps to assure that the software is trustworthy and secure. It is an idea which has been brought from engineering software to check whether it keeps on working properly under malicious outbreaks. Software security testing process is lengthy, complex and costly. It is because several types of bugs are escaped in testing on a routine basis. The application might perform some additional, unspecified task in the process while effectively behaving as indicated by the requirements. Thus, to build secure software as well as meet budget and time constraints it is essential to emphasis testing effort in areas that have a larger number of security vulnerabilities. Therefore, vulnerabilities are classified and various taxonomies have been created by computer security researchers. Along with the taxonomies, there are also various methods and techniques which helps to test the commonly appearing test issues in software. These techniques gener ally include generic tools, fuzzing, checklists of unpredictable depth and quality, vulnerability scanners, hacking or hiring hackers etc. This study focuses on the introduction, importance, vulnerabilities, approaches and methods of security testing. Articles related to these components were chosen. They were then evaluated on the basis of security testing approaches. Furthermore, the study explores the flaws and vulnerabilities of security testing and figures out the importance of security testing. Moreover, the research also highlights various methods and techniques of security testing. In the end, compiling all the articles research questions like what is the importance of security testing and what are the approaches to security testing are answered. Introduction Security is one of the many aspects of software quality. Software turns out to be more complicated, with the wide utilization of computer which likewise increase software security problems. Software security is the ability of software to provide required function when it is attacked as defined by the authors (Tian-yang, Yin-sheng You-yuan, 2010). There are few common types of security testing such as vulnerability assessments, penetration tests, runtime testing and code review. New vulnerabilities are being discovered with the coming of internet age. They are existing because of many reasons: poor development practices, ignoring security policies during design, incorrect configurations, improper initialization, inadequate testing due to deadlines imposed by financial and marketing needs etc. (Preuveneers, Berbers Bhatti, 2008). The significance of security in the life cycle from network security, to system security and application security is currently recognized by the companies and organizations asa coordinated end-to-end procedure stated by (Felderer, Bà ¼chler, Johns, Brucker, Breu Pretschner, 2016). Therefore, in systems to discover which types of vulnerabilities are dominant, security vulnerabilities are categorized so as to focus the type of testing that would be needed to find them. On the basis of these classifications, various taxonomies are developed by computer security researchers. According to the author (AL-Ghamdi, 2013), at the requirements level security should be explicit and must cover both overt functional security and emergent individualities. One great approach to cover that is using abuse cases which portrays the systems behaviors under attack. Two strategies that must be incorporated by security testing are : testing security functionality using standard functional testing techniques and risk based security testing based on attack patterns and threat models. There are normally two categories of vulnerabilities: bugs at the execution level and flaws at the design level (Tondel, Jaatun Meland, 2008). The research done in this article evaluates the security testing approaches and the methods in order to detect the flaws and vulnerabilities of security in the software. All this approaches and methods of security testing will help to make the software more secure, flawless and bug-free. Thus, the goal of this study is to find out the significance of security testing in todays fastest growing internet age and to introduce developers with an esteemed importance of systems security. The literature review is divided into 4 sections. The first section gives the overview of security testing. The next sections answer the research questions like what is the importance of security testing and what are the various approaches to security testing. Literature Review Importance of Security Testing In contrast with simple software testing process, providing security to a system is exceptionally unpredictable. This is because simple software testing only shows the presence of errors but fails to show the absence of certain types of errors which is ultimately achieved by security testing. As per the author (Khatri, 2014), there are two essential things which should be checked by the system: First, validity of implemented security measures. Second, systems behavior when it is attacked by attackers. The loopholes or vulnerabilities in system may cause failure of security functions of system eventually leading to great losses to organization. So, it is extremely fundamental to incorporate testing approaches for data protection. Security Vulnerabilities There are certain types of errors which are termed as security vulnerabilities, flaws or exploits. The authors (Tian-yang, Yin-sheng You-yuan, 2010) states that there are certain flaws present in system design, implementation, operation, management which are referred as vulnerabilities. As per (Tà ¼rpe, 2008), in order to target testing it is important to understand the roots of vulnerabilities and these vulnerabilities vary from system to system. These exploits are broadly categorized on their similarities by (Preuveneers, Berbers Bhatti, 2008) as follows: Environment variables: Information that does not change across executions of a program is encapsulated by such variables. Buffer Overflows: A memory stack is overflowed which leads the program to execute the data after the last address in the stack, generally an attacker gets the full control of the system when an executable program builds a root or command line shell. Operational Misuse: Operating a system in a non-secure mode. Data as Instructions or Script Injections: due to improper input checking, scripting languages include information with executable code which is then executed by the system. Default Settings: If default software settings require user intervention to secure them they may encounter a risk. Programmer Backdoors: The developers of the software leave the unauthorized access paths for easy access. Numeric Overflows:Giving a lesser or greater value than estimated. Race Conditions:Sending a string of data before another is executed. Network Exposures: It is assumed that when messages are sent to a server adequately, clients will check that. Information Exposure: Sensitive information is exposed to unauthorized users which can be used to compromise data or systems. Possible Attacks According to the authors (Preuveneers, Berbers Bhatti, 2008), (Felderer, Bà ¼chler, Johns, Brucker, Breu Pretschner, 2016) and (AL-Ghamdi, 2013), secure software should achieve security requirements such as reliability, resiliency, and recoverability. Then they describe various possible attacks such as: Information Disclosure Attacks: To disclose sensitive or useful data, applications can often be forced. Attacks in this class include directory indexing attacks, path traversal attacks and determination of whether the application resources are allocated from a conventional and accessible location. System Dependency Attacks: By observing the environment of use of the targeted application, vital system resources can be recognized. Attacks of this type include LDAP injection, OS commanding, SQL injection, SSI injection, format strings, large strings, command injection, escape characters, and special/problematic character sets. Authentication/Authorization Attacks: These attacks includes both dictionary attacks and common account/password strings and credentials, exploiting key materials in memory and at component boundaries , insufficient and poorly implemented protection and recovery of passwords. Logic/Implementation (business model) Attacks: For an attacker, the hardest attacks to apply are often the most gainful. These include checking for faulty process validation, broadcast temporary files for sensitive information, attempts to mall-treatment internal functionality to uncover secrets and cause insecure behavior and testing the applications ability to be remote-controlled. Approaches to Security Testing According to the author (Khatri, 2014), approach to security testing involves determining who should do it and what activities they should undertake. Who: This is because there are two approaches which security testing implicates 1) Functional security testing and 2) Risk-based security testing. Risk-based security testing gets challenging for traditional staff to perform because it is more for expertise and experience people. How: There are several testing methods however the issue with each method is the lack of it because most of organizations devote very little time in understanding the non-functional security risks instead it concentrates on features. The two approaches functional and risk-based are defined by the authors (Tà ¸ndel, Jaatun Jensen, 2008) as follows: Functional security testing: On the basis of requirements, this technique will determine whether security mechanisms, such as cryptography settings and access control are executed and configured or not. Adversarial security testing: This technique is based on risk-based security testing and determines whether the software contains vulnerabilities by pretending an attackers approach. Methods and Techniques of Security Testing by (Tian-yang, Yin-sheng You-yuan, 2010), (AL-Ghamdi, 2013) and (Felderer, Bà ¼chler, Johns, Brucker, Breu Pretschner, 2016). Formal security testing To build a mathematical model of the software and to provide software form specification supported by some formal specification language is the basic idea of formal method. Model-based security testing A model by the behavior and structure of software is constructed by model-based testing and then from this test model, test cases are derived. Fault injection based security testing This testing emphasizes on the interaction points of application and environment, including user input, file system, network interface, and environment variable. Fuzzy testing To discover security vulnerability which gets more and more attention, fuzzy testing is effective. To test program, it would inject random data and evaluate whether it can run normally under the clutter input. Vulnerability scanning testing To find software security risks, vulnerability testing is used which includes testing space scanning and known defects scanning. Property based testing By using program slicing technology, this method will extract the code relative to specific property and find infringement of the code against security property specification. White box-based security testing One of common white-box based testing method is static analysis which is great at finding security bug, such as buffer overflow. It includes main features like deducing, data flow analysis and constraint analysis. Risk-based security testing To find high-risk security vulnerabilities as early as possible, risk-based security testing combines the risk analysis, security testing with software development lifecycle. Discussion There are some type of security vulnerabilities which are more serious or are more common than others, therefore classification and rankings of vulnerabilities can be utilized to focus testing. Today, attacks such as Cross-Site Scripting and SQL injection are very common and new vulnerabilities are still being discovered. Basically, security testing can be divided into security vulnerability testing and security functional testing. To ensure whether software security functions are implemented correctly and consistent with security requirements, security functional testing is used. Whereas to discover security vulnerabilities as an attacker, security vulnerability testing is used. Risk-based security testing is useful when a complex system requires numerous tests for adequate coverage in limited time. Recommendation To build a secure system, security testing is used however it has been overlooked for a long time. Protection and security have been given prime significance in todays world, therefore in programming applications, it is highly recommended to look forward for information and operations security which demands critical consideration but it is rather ignored. There is still nothing like 100% security. The old way of doing things and traditional methods must change and new methods should be applied in practice if one wants to ship secure code with confidence. Conclusion The literature review was done taking 8 articles addressing the topic Significance of Security Testing. This report analyses the definition, classification, importance and approaches to software security testing. Classification of vulnerabilities and flaws were identified and what could be the reason behind occurrence of these vulnerabilities were discussed. The study also highlighted the various approaches like the functional and risk-based security testing and various methods in detail to tackle the flaws and errors detected in the system. These methods and techniques helps the system in various aspects like to advance the capability to produce protected and safe software, more cost-effective management of vulnerabilities and measure progress. Though, these approaches and classification makes software secure to a major extent but still security testing has a long way to go. References AL-Ghamdi, A. S. A. M. (2013, April). A Survey on Software Security Testing Techniques. Felderer, M., Bà ¼chler, M., Johns, M., Brucker, A. D., Breu, R., Pretschner, A. (2016). Chapter One-Security Testing: A Survey. Advances in Computers, 101, 1-51. Khatri, M. (2014). Motivation For Security Testing. Journal of Global Research in Computer Science, 5(6), 26-32. Preuveneers, D., Berbers, Y., Bhatti, G. (2008, December). Best practices for software security: An overview. In Multitopic Conference, 2008. INMIC 2008. IEEE International (pp. 169-173). IEEE. Tian-yang, G., Yin-Sheng, S., You-yuan, F. (2010). Research on software security testing. World Academy of science, engineering and Technology, 70, 647-651. Tà ¸ndel, I. A., Jaatun, M. G., Jensen, J. (2008, April). Learning from software security testing. In Software Testing Verification and Validation Workshop, 2008. ICSTW08. IEEE International Conference on (pp. 286-294). IEEE. Tondel, I. A., Jaatun, M. G., Meland, P. H. (2008). Security requirements for the rest of us: A survey. IEEE software, 25(1). Tà ¼rpe, S. (2008, April). Security testing: Turning practice into theory. In Software Testing Verification and Validation Workshop, 2008. ICSTW08. IEEE International Conference on (pp. 294-302). IEEE. Appendix A Articles Concepts Requirements for Security Testing Vulnerabilities (Exploits, bugs, flaws) Possible Attacks on Software Approaches Techniques or Methods Functional Risk-based Best Practices for Software Security: An Overview (Preuveneers, Berbers Bhatti, 2008) à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  Motivation For Security Testing (Khatri, 2014) à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  Security Testing: A Survey (Felderer, Bà ¼chler, Johns, Brucker, Breu Pretschner, 2016) à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  A Survey on Software Security Testing Techniques (AL-Ghamdi, 2013) à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  Security Requirements for the Rest of Us: A Survey (Tondel, Jaatun Meland, 2008) à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  Research on software security testing (Tian-yang, Yin-Sheng You-yuan, 2010) à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  Learning from software security testing (Tà ¸ndel, Jaatun Jensen, 2008) à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  Security testing: Turning practice into theory (Tà ¼rpe, 2008) à ¯Ã‚ Ã‚  à ¯Ã‚ Ã‚  Figure 1: Concept Matrix of the study of Significance of Security Testing

Some Lead, Some Follow, Others Change the World Essay -- Civil Rights

When being asked which Civil Rights activist of the movement was most effective, the answer is quite obvious. This movement originated due to what is called â€Å"Jim Crow† laws. These laws suggested that everyone is separate but equal. Otherwise became blindingly apparent when African Americans were subdued by whites in various ways. For example, the justice system always considered the case of white man over a black one. Also, an African American facility was certainly not comparable to the superior quality of White’s. Soon, organizations began to form in attempts to stop this unjust treatment. One man in particular stands out the most throughout this movement of change: Dr. Martin Luther King Jr. Martin Luther King Jr.’s form of protesting was the more effective than activist Malcolm X and was the reason for the majority of success during the Civil Rights movement. This is because Malcolm X’s cause would only slow progress during the movement, Martin Lu ther King Jr. had more authority, and he understood that peaceful protesting is the very genesis of redefining a nation. Malcolm X’s cause did not support any advancement in the Civil Rights movement. If anything, his efforts deterred any progress by encouraging separation. Malcolm X looked up to the Black Muslim leader Elijah Muhammad. Muhammad’s campaign was based around whites being â€Å"descended from the devil† and â€Å"being born to harm blacks†. Malcolm soon adopted and idolized this ideology that not only reached toward separate nations, but frightened whites. Considering this, the group the Black Panthers in which Malcolm X formed later on created their own schools, businesses and newspapers in order to further segregate themselves from whites. This group was encouraged by the ide... ...t. He built bridges between races, not walls like Malcolm X. Malcolm X’s cause would only dismiss the goals of the Civil Rights movement. Also, Martin Luther King Jr. had more of an impact amongst his public. Lastly, he contributed to the ongoing idea that acting in a peaceful manor will make goals much more attainable. Martin Luther King Jr. had a very positive impact on not only his public, but this nation. He will never be forgotten within history. Works Cited Levy, Peter B. Let Freedom Ring: a Documentary History of the Modern Civil Rights Movement. New York: Praeger, 1992. Glencoe. "Online Student Edition." Glencoe/McGraw-Hill. 2008. Web. . Cruz, Kimberly. "Comparing Martin Luther King, Jr. and Malcolm X." Http://www.polk-fl.net. Web. .

Ronald Reagan, Reagan by Lou Cannon Essay -- essays research papers

Cannon, Lou. Reagan. New York: Putnam, 1982. Lou Cannon has covered Ronald Reagan for thirty-six years, first as a reporter for the San Jose Mercury News, later as the White House correspondent for the Washington Post. He began with covering Reagan's first campaign for governor of California in 1966 and continued until Reagan's recent death in 2004. His other books on Reagan include Ronnie and Jesse: A Political Odyssey, Ronald Reagan: The Presidential Portfolio, President Reagan: The Role of a Lifetime, Governor Reagan: His Rise to Power, and several others. After following and working closely with Reagan, Cannon forms an obvious relationship and opinion of him. Cannon admits that he "like(s) and respect(s) Ronald Reagan while remaining skeptical that his actions will achieve the results he intends," (Cannon, 1981, 15). Cannon writes that he was at first skeptical of Reagan's abilities to perform as president; specifically with foreign policy and his economic theories. However, Cannon argues that Reagan's presidency may mirror his governorship, "he started ineptly but soon evolved into a competent governor who was willing to sacrifice ideology for political achievement," (Cannon, 1981, 15). Because this book was written during Regan's first year as president, Cannon is unable to record complete evidence to support his own theory, although he accomplishes this in his following books about President Reagan. Cannon, an obvious conservative supporter of Reagan, includes criticisms and shortcomings of Reagan as well a s praise. Cannon does not let his personal relationship skew his writings and has thus become known as Reagan's definitive biographer. Cannon's mission to provide an in depth biography of the nation's fortieth president and his ability to lead, begins by tracing Reagan's origins, his hopes and dreams, fears, achievements and failures. Cannon provides the reader with insight to Reagan's childhood and adolescent years and attempts to explain the beginnings of Reagan's motivations, optimism and determination. Cannon argues that much of Reagan's optimism, determination and political motivation spur from living through the Depression. Reagan sees the Depression as a national tragedy, not a personal one, and forever becomes enthralled with Presi... ...f Reagan's life including those listed previously. Reagan offers an insight into the former president's life and presidency prior to 1982. It is well written, providing colorful anecdotes which keep the reader's interest. The personal stories give vivid insight into Reagan's childhood, young adult life and early political career. Although intended to support the idea that Reagan was prepared and qualified for the presidency, Reagan is comprised of over four hundred pages describing Reagan as ill-equipped for the job. Cannon's overcompensation for detachment contradicts his argument that," He (Reagan) belonged in the White House. He had every right to dream heroic dreams," (Cannon, 1981, 411). Though the book is well researched and organized its evidence overwhelms its conclusion. Reference: Cannon, Lou. Reagan. New York: Putnam, 1982. Cooke, Allistair, "Reagan." Review of Reagan, by Lou Cannon. New Yorker, March 14, 1983, 148. Wilkie, Curtis, "Reagan," Review of Reagan, by Lou Cannon. New York Times Book Review, October 3, 1982.

Borgmann’s Proposal to Reform Technology Essay -- Philosophy Albert Bo

Borgmann’s Proposal to Reform Technology Albert Borgmann follows the general project by Heidegger to see how technology has harmful effects on humanity and to determine how it can be reformed. Borgmann shares Heidegger’s view that modern technology is starkly different from premodern technology in its pattern of disclosing the world to human beings. Borgmann agrees that a sort of ethical reform must be undertaken to limit technological ways of living from dominating the lives of individuals and to keep technology in its place. His proposal for a direction of reform first takes cues from Heidegger but then asserts the need for different tactics. First, we look at Borgmann’s chapter "Focal Things and Practices." Here he names the things that matter in directing human lives "focal." Focal things contribute to the direction and ordering of one’s life in a productive way, and they disclose the world and illuminate the context of themselves and their related life activities. He actually uses a lot of verbs to convey the sense of focus with which he is concerned, so no one terse definition is given. Borgmann agrees with Heidegger that the simple kinds of things are those that focus a gathering of information about the world and benefit human beings by highlighting important life concerns, though he thinks that Heidegger sees the use of these things as too much an escape from technology rather than an affirmation of it. These simple, focal things are premodern objects, such as Heidegger’s example of an earthen jug, or even activities. The jug gathers and discloses the world because it is made of the earth and is used to store wine from grapes that grow in the earth; furthermore, the jug is used in the human context of tradition, ... ... things and practices are without being misguided by the level of a thing’s technological complexity. It seems that if focal practices engage certain elements but technology does not in principle exclude those elements, both of which Borgmann agrees, then it is not necessary to maintain Borgmann’s criticism of modern technological things. His concern is the pattern in which technology is currently engaged, and he has not at all made it clear how the troublesome disunities and commodities are necessarily related to the products of modern technology. We need to find the essential features of focal concerns and apply them to a reform proposal without Borgmann’s intermediate complications. Bibliography Borgmann, Albert. "Focal Things and Practices." Philosophy of Technology. Ed. Robert C. Scharff and Val Dusek. Malden, MA: Blackwell Publishing, 2003. 293-312.

The Difference Between Consumer Buyer Behaviour and Organisational Buyer Behaviour

The difference between Consumer Buyer Behaviour and Organisational Buyer Behaviour In this essay we will be talking about the difference between consumer buyer behaviour and organisational buyer behaviour and how marketers can harvest this knowledge to create the right marketing strategies for each category of market. The main difference between consumer buyer behaviour and organisational buyer behaviour is that consumer buying consists of activates involved in buying and using of products for personal and household use, where organisational buyers purchase primarily for organisational purpose.Consumer behaviour is complex and a company has to fit their product more closely and satisfy their customer needs more fully than the competitors. Marketers will also need to know whether their controllable variables, e. g. marketing mix variables, will affect buying behaviour. Culture is the broadest environmental factor witch influences buyer behaviour, consumption choices cannot be understo od without considering the culture. It is the prisms with witch customers perceive the product. The culture of consumers determines the priorities he attaches to different products.The link between consumer behaviour and culture is a two-way street. In one direction the products that are produced to fit a consumer’s culture are better accepted, in the other direction products and innovation that are created in a specific culture on a given time show us a clear domination in the cultures ideals. (Michael Solomon, Culture, 2006) Social class refers to the grouping together of individuals or families who have certain common social or economic characteristics. Societies can be divided in haves and have-nots.Social Class is determined by income, family background and occupation. The social class is not only determining how much money is spent by the individual but also how it is spent. (Michael Solomon, Consumer Behaviour A European Perspective, 2006) Consumer buyer behaviour Masl ow`s hierarchy of needs is the first model we are looking at. It implies a hierarchy of biogenic and psychogenic needs where the order of development is fixed and a certain level must be attained before the next higher one.In Maslow`s hierarchy one must first satisfy basic needs before he can progress up the ladder. The application of this model is relatively simplistic as one product can satisfy more than one need. (Michael Solomon, Consumer Behaviour , 2006) The next model we are talking about is the Howard Sheth model. The model describes brand decision under incomplete or limited information. It distinguishes three levels of decision: 1) Extensive problem solving- the buyer has little or no knowledge about the product and has no criteria by which to choose the product. ) Limited problem solving- In this stage the choice criteria are defined but the buyer is still undecided about the brads which best serve him. 3) Routinized responses behaviour- The criteria set in this stage is well defined and the consumer has the best brand which best serves him. He makes the buying process with little evaluation of alternatives. The Howard Sheth model borrows concepts from the learning model to explain brand choice. Four major components are involved in this process: impute variables, output variables, hypothetical constructs and exogenous variables. Rao, 2011) There are three different impute variable, the first and second is provided by the marketer by significant stimuli like physical brand characteristics and symbolic stimuli like visual or verbal characteristics. The third variable is provided by family, reference group etc. (Rao, 2011) The perceptual and learning construct define the main part of the model. It deals with the psychological variables with interact with the consumer decision making. The output variables are the response to the impute variables and helps us understand how the consumer will engage with the perceptual construct. Rao, 2011) The Last mode l we are looking at is the Engel-Kollat-Blackwell model which was created to describe the knowledge concerning consumer behaviour. The first stage is the decision-process stage. The model is focusing on the five mine decision-process stages: Problem recognition, search for alternatives, alternate evaluation purchase, and outcomes. The consumer does not necessarily have to go through all this stages. The number of stages depends if it is an extended or a routine problem solving behaviour.The Second stage is the information impute where the consumer is getting information from marketing and non-marketing sources with will influence the decision-making process. The third stage is the information processing stage and it consists of the exposure, attention and retention of the consumer to the information. The consumer must first be exposed to the message, allocate space for this information, interpret the stimuli, and retain the message by transferring the input to long-term memory. The fourth stage consists of individual and environmental influences that affect all five stages of the decision process.Individual characteristics include motives, values, lifestyle, and personality; the social influences are culture, reference groups, and family. Situational influences, such as a consumer’s financial condition, also influence the decision process. (Engel, 1995) Organisational buyer behaviour Broadly speaking organisational customers can be classified in commercial, institutional and governmental sector. (Oxford University Page) The Commercial customers can be divided furthermore in 1) Distributors: They are also known as intermediaries and their main purpose is to transfer products through the supply chain adding value to them.The main types of intermediary are wholesales, dealers, agents, value-added resellers. 2) Original equipment manufacturers (OEMs): They are the classic business customer. They purchases parts or materials and manufacture and market with t he manufacturer’s brand. 3) Users: These customers buy some products to sustain their own production. 4) Retailers: They purchase goods to sell them to their customers. The Institutional customer may differ greatly from the commercial customer in the preceding list. Universities are a good example of institutional customers and the products they have to buy in order to keep operating. Oxford University Page) The Governmental customers can differ from government to government as they can regalement their spending on military health and education. While there are differences between consumer buyer behaviour and organisational buyer behaviour we clearly can see some similarities between them especially when we realises that rationality in organisational buyer behaviour can be misplaced. If the buyer are people to then they can also make mistakes lead by perception, emotion and pear pressure.On the other hand some consumer purchases involve high technical complexity and time invo lving information search. The practice of B2B and B2C is not always clear as an example we can take Sun Microsystems witch approaches large business directly but also encourages small developers to build OEM machines and sell them to customers. (Oxford University Page) We clearly can see that there are some similarities in the B2C and B2B market but there are some huge differences. For example, consumer markets often consist of millions of customers where far fewer customers are in the organisational market.A small percentage often makes a large percentage of the earnings of a B2B business. (Oxford University Page) The B2C buying process can be fairly complex for a high involvement purchase like a car but in a B2B market there is often not only one person involve in this process, it is typically known as the decision-making unit (DMU). Members involved in this decision making unit can be managers who are not involved in the usage of the product and often have a strategic and financi al perspective of the company but also members who directly use the product are involved in the decision making process.We can describe the different parties (Webster and Wind, 1972) in the decision making process as followed: 1) Initiator- is the person who makes the first request for the purchase 2) Buyer – they are the formal authority in the process and are making the purchases from the suppliers 3) Influencers –they affect the decision-making process by providing internal or external information. 4) Decision makers- they are the persons with the authority to approve a purchase. 5) Users – they are the persons who use the product. They often deliver feedback of the performance. ) Gatekeepers – they control the flow of information to other managers within the buying organisation One of the most recognised models of organisational buyer behaviour is the Buygrid Framework (Robinson et al, 1967). It combines nature of the buying situation with the stages in the decision process. It is worth noting the differences between the three buyclass situations: 1) New task purchases – In this category the company is buying a product or a service for the first time. They typically have no experience in the supplier’s capabilities. The DMU is usually larger and the schedule for the decision is often extended. ) Modified rebuy – in this chase the company has already knowledge about the suppliers capabilities but has to alter a variable in the order witch could be: time, amount or price. 3) Straight rebuy – in this case the company does not alter the order. It is normally seen when basic goods are ordered. The decision-making process is quite formal in B2B markets and it goes through many as eight buyphases for a new task purchase: 1) Problem Recognition – this can be created by a supplier review, dissatisfaction with current providers and changing business needs. ) General need description – the need can come from an innovation, the need for cutting costs or improving production. 3) Specifications – It necessity buyer/supplier dialog and is the part where suppliers are differentiated and evaluated. 4) Supplier search – it is the stage where a consideration set of suppliers is created and information is gathered. 5) Proposal submission – suppliers are put into a choice set and a proposal is solicited from those last few suppliers 6) Supplier Selection – in this stage proposals are evaluated and negotiation may take place between buyer and seller. ) Order process specification – in this stage an agreement or a contract is created. 8) Performance review – in this stage the suppliers are revised and benchmarked and then changed, modified or discontinued. (Oxford University Page) It is very important for a company in the B2B market to understand the different members and their roles in a DMU of a company; the members can be brought together from all parts of a company and can include purchasing, R&D, finance and even marketing.The marketing strategy of the supplying must reflect the individual interest within a DMU but also the whole interest and group dynamic of a DMU. (Oxford University Page) Referencing (n. d. ). Retrieved 03 21, 2012, from Oxford University Page: http://www. oup. com/uk/orc/bin/9780199551682/ellis_ch02. pdf Engel, J. B. (1995). Consumer Behaviour. In J. B. Engel, Consumer Behaviour. Michael Solomon, G. B. (2006). In G. B. Michael Solomon, Consumer Behaviour A European Perspective (p. 460). Michael Solomon, G. B. (2006). Consumer Behaviour . In G. B.Michael Solomon, Consumer Behaviour A European Perspective (pp. 125-126). Michael Solomon, G. B. (2006). Culture. In G. B. Michael Solomon, Consumer Behaviour A European Pespective (pp. 525-527). Rao, V. S. (2011, 01 10). Howard Sheth Model. Retrieved 03 21, 2012, from cite Man Network: http://www. citeman. com/13241-howard-sheth-model. html Robinson, P. J. , Faris, C. W. , & Wind, Y. (1976) Industrial Buying and Marketing , Allyn & Bacon, Boston Webste, F. E. & Wind, Y. (1972) Organisational Buying Behaviour, Prentice Hall, Engelwood Cliffs, NJ

Report on Inflation

EVOLUTION OF EXCHANGE RATE REGIME: IMPACT ON MACRO ECONOMY OF BANGLADESH by Liza Fahmida A project submitted in partial fulfillment of the requirements for the degree of Professional Master in Banking and Finance Examination Committee: Dr. Sundar Venkatesh (Chairperson) Dr. Juthathip Jongwanich Dr. Yuosre Badir Nationality: Bangladeshi Previous Degree: Master in Finance and Banking University of Dhaka Bangladesh Scholarship Donor: Bangladesh Bank Asian Institute of Technology School of Management Thailand May 2012 ACKNOWLEDGEMENT The dissertation paper entitled â€Å"Evolution Of Exchange Rate Regime: Impact On Macro Economy Of Bangladesh† has been prepared for the partial fulfillment of Professional master in Banking and Finance (PMBF) program conducted by School of Management, AIT, Thailand. I would like to offer my wholehearted gratitude and respect to a good number of people who offered encouragement, data and information, inspiration and assistance during the course of co nstructing this dissertation paper.It would be difficult to prepare the paper and to present it in a lucid manner within stipulated time without the help of my guide teacher Dr. Sundar Venkatesh, Adjunct Faculty, School of Management, Asian Institute of Technology, Thailand. His utmost care, constant support and meticulous supervision guided me through the process. I am indebted to Begum Sultana Razia, General Manager, Monetary Policy Department, Bangladesh Bank, whose sincere co-operation and valuable advice help me to prepare this paper.I would like to thank all of my colleagues and other employees of Foreign Exchange Policy Department and Monetary Policy Department, Bangladesh Bank for their assistance in this regard. I would like to thank all of fellow course mates who contributed through their comments and suggestions to prepare the report in a comprehensive manner. ii ABSTRACT Bangladesh had two different exchange rate regimes- a fixed exchange rate system from January 1972-Ma y 2003 and a floating exchange rate regime since June 2003. After adopting the floating exchange rate regime Bangladesh experienced positive impacts on macro economic development.The variables of the macroeconomic factors have been considered as foreign reserve, workers’ remittances and export proceeds to evaluate the impact of exchange rate over them in this paper. But the ongoing challenges for the country are the depreciating trend in local currency in a highly inflationary economy. The objective of the paper is to evaluate the macroeconomic performance over the regimes and to analyze present currency situation of Bangladesh. iii Table of Content NO. 01 Title page Acknowledgement Abstract Table of contents List of Figures List of Abbreviations Chapter-01 02 1. 1 Rationale 1. Scope 1. 3 Objectives of the study 1. 4 Methodology 1. 5 Limitations 1. 6 Organization 02 Chapter-02 Literature Review 03 Introduction 3. 1 Factors Affecting Exchange Rate 3. 2 Performance of previous and current FX-Regime in Bangladesh rate of GDP 3. 2. 1 Growth Unde 3. 2. 2 Current Account Balance 3. 2. 3 Inflation Situation 3. 3 Justification of Floating Exchange Rate 3. 4 The Transition from Fixed to Float 04 Chapter-04 Performance of Floating Exchange Rate System On Macro Economy of Bangladesh 4. 1 The Export On Macro Economy of Bangladesh Situation 4. 2 Enhancement of Workers Remittance 4. Reserve Position 4. 4 The Growth Rate of GDP 13 14 14 15 7 8 8 8 9 10 10 Chapter-03 Exchange Rate Evolution in Bangladesh 7 Introduction 1 1 1 2 2 2 3 3 SECTION Page I ii iii iv V vi iv 4. 5 Relationship among variables 05 Chapter 5 Preset Exchange Rate Situation Preset Exchange Rate Situation 5. 1 Exchange Rate Movement 5. 2 Reasons for Currency Depreciation 5. 2. 1 High Inflation 5. 2. 2 Low Foreign Direct Investment 5. 2. 3 Trade Deficit Chapter 6 06 Recommendation and Conclusion 6. 1. Control Inflation 6. 2. Reduce Trade Deficit 6. 3 Enhancing Foreign Direct Investment 6. 3 Effective Capital Market 6. Short Term Foreign Borrowings 6. 5 Effective Capital Market 6. 6 Derivatives Market 6. 7 Formation of Domestic FX Market 6. 8 Autonomy of the Central Bank 07 08 References Appendix Trade Deficit of Bangladesh Yearly Reserve Position Yearly data of Workers Remittance Yearly data of Inflation Yearly data of Export, Remittance, Reserve and Exchanger Rate Monthly data of Remittance and Exchange Rat Regression Analysis FDI In Bangladesh 16 17 17 17 18 18 19 21 21 21 21 21 21 21 22 22 22 23 24 25 26 27 28 29 30 31 v LIST OF FIGURES TITLE 3. 4 3. 5 4. 1 4. 2 4. 3 4. 4 5. 1 5. 2 5. 3 5. Exchange Rate Movement immediately after inception of Floating Comparison of month end Real Effective Exchange Rate The Export Volume in US$ The Workers Remittance The Foreign Reserve Position (REER) and Nominal Exchange Bangladesh GDP Growth Rate Rate between 2003-2004. Exchange Rate Movement Figure: Inflation Growth Rate of Foreign Direct Investment Trade Deficit of Bangladesh PAGE 11 11 13 14 15 16 17 18 19 20 vi LIST OF ABBREVIATIONS AD ADB BB FDI FPI FX FY GDP IMF LC Authorized Dealers Asian Development Bank Bangladesh Bank Foreign Direct Investment Foreign Portfolio Investment Foreign Exchange Financial YearGross Domestic Product International Monetary Fund Letter of Credit NEER OANDA REER USD Net Effective Exchange Rate Website of exchange rates information. Real Effective Exchange Rate Us Dollar vii Chapter 1 INTRODUCTION At the preamble of the Bangladesh Bank order, 1972, it is stated that â€Å"Whereas it is necessary to establish a central bank in Bangladesh to manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary value and maintaining a competitive external par value of the Bangladesh Taka toward fostering growth and development of country’s productive resources in the national interest. To maintain a competitive external par value of the Bangladesh Taka, as per Foreign Exchange Regulation Act, 1947, Bangl adesh Bank as a central bank of the country, regulates the foreign exchange on behalf of the government 1. 1 Rationale: Exchange rate indicates the global position of economy of the country. The country’s economic development is closely related with it’s foreign exchange system. Foreign exchange rate is a vital component for the country’s economic activities too. Bangladesh has been experienced the floating exchange rate regime since May 2003 and passed a number of Pons and cons in the overall economy.Due to the utmost importance of the exchange rate in the economy, the study has been conducted in this area. 1. 2 Scope: This paper covers the comparison of the fixed and floating exchange regime of Bangladesh. The key factor of this paper is the evaluation of the impact of exchange rate on the fundamental macroeconomic indicators of the economy. Three main fundamental factors have been identified to measure their impact with exchange rate. Those are export, worker s remittance and foreign exchange reserve. The empirical data of 2000 to 2012 has been used to ustify the whole thing. To get an idea about the Bangladesh’s position, some neighboring country’s experience also been compared here. 1. 2 Objectives of the study 1. To evaluate the exchange rate regimes in Bangladesh economy: Fixed and Floating 2 To evaluate the floating arrangement's performance in three macro economic variables: Export, Workers Remittance and Foreign Reserve. 3 To understand the reason for currency depreciation 1 1. 4 Methodology To obtain the objectives of the study, secondary data have collected.The sources of data are Bangladesh Bank, Board of Investment, Export Promotion Bureau, Websites of IMF, ADB, OANDA and other related links. Statistical analysis correlation has been calculated to understand the exchange rate’s significance on the economic variables of Export, Workers Remittance and Foreign Reserve . 1. 5. Limitations There were some limit ations to conduct the study. Being, sensitive, new one, problems were faced to relate with various components and linking with them. And for its very nature, primary data was not available.Since the exchange rate regime is a vast area, it was also challenging to prepare this report within a limited time. 1. 6. Organization There are six chapters in this report. Chapter I is the introduction that divided into six sub sections. Literature Review is in Chapter 2. Exchange Rate Evaluation in Bangladesh has been covered in Chapter 3. Chapter 4 covers Performance of Floating Exchange Rate System On Macro Economy of Bangladesh. Present exchange rate situation is describing in Chapter 5. The last chapter covers recommendation and conclusion. 2Chapter 2 LITERATURE REVIEW The basic policy variables of country is foreign exchange rate that ensured trade, business, long term funding, foreign direct investment, inflation, foreign exchange reserve, inward remittance etc. Various economists opined that the policy of the exchange rate system had a crucial impact on 1990’s economic catastrophe. Nevertheless, it is yet to be proved either theoretically or empirically regarding the role of exchange rate on the indicators of macroeconomic variables. Whatever the case may be, different countries adopt different exchange rate policies.Bangladesh, the focus of this paper, had a fixed exchange rate system in place since January, 3 1972. After more than 31 years, the Central Bank of Bangladesh (Bangladesh Bank) changed it into a floating exchange rate system in June 2003. Bangladesh has been pursuing a floating exchange rate system since then. Dr. Mirza Azizul Islam, the former advisor, Ministry of Finance of the Caretaker Government of Bangladesh, presented a paper in January 2003, right before the shift from fixed to floating regime, explaining the overall performance of the fixed regime and the probable implications of the floating regime on Bangladesh economy.He suggested t hat the experiences of other countries in the region show that floating regime generates greater volatility in exchange rates and this sort of uncertainty is likely to affect adversely the overall trade and investment climate which is already afflicted by many unfavorable elements in Bangladesh (See Islam, 2003). Bangladesh pursued a ‘fixed exchange rate’ regime upto 1979. After that, from 1979 to mid-2003, it followed a managed floating exchange rate system.Repeated depression of the home money, for maintaining a steady real exchange rate as well as keeping away from overvaluation of the local taka, were the prime factors for taking new system of the foreign exchange system. From May, 2003, Bangladesh took almost a new policy known as ‘clean floating’ exchange rate policy by creating fully convertible current account. But capital account convertibility is not yet done. The main reasons for all the policies that Bangladesh took were due to improve export si tuation, decrease import liability with the aim of improving balance of trade.The evidences in favor of the above mentioned opinion have been placed below. Islam( 2003) told that the regulators of the monetary policy decides the exchange rate policy of the country in order to obtain two basic goals. The first one is â€Å"domestic target† that covers preventing inflation rate of inflation, the growth of credit both in Government and Private levels, and also the growth in liquidity and M2. The second reason is â€Å"external target† which considers foreign exchange reserve hike, declining current account balance, prevent exchange rate volatility in the country’s nterbank foreign exchange market as well as balance the exchange rate flow with neighboring countries like India, Bhutan, Sri Lanka, Pakistan etc. Hossain (2005) referreing Rahman and Bayes that Bangladesh took floating exchange rate system due to: (i) global competitiveness; (ii) improve export dimension s ;(iii) eliminate subsidy from export; (iv) reduce import pressure; (v) increase the substitutes products for export. Aziz (2003) showed that according to the statements of the finance ministers for 3 ast decades, the prime causes of devaluation of taka in our country (i) rise in export;(ii) reduce import;(iii) improve local newborn industries; (iv) promote the inward remittances trough pursue wage earners, and (v) increase foreign exchange reserve. As per the â€Å"Financial Sector Review(2006)’ of the central bank of the country, the major reasons of exchange rate policy covers: (i) export promotion; (ii) encourage inward remittances;(iii) keeping the price level stable, and (iv) preserve a variable account situation externally.As a result, all the publications and write-ups have illustrated both directly or indirectly the export-growth and import reduction as the key reasons of the exchange rate policy of the country. Prior to adopting floating exchange rate regime, Isla m (2003) argued that the economic and institutional prerequisites of a floating exchange rate regime are not met in Bangladesh. Some recent studies have tried to explain the behavior of nominal exchange rates of Bangladesh after its transition to the floating rate regime.By doing a correlation analysis, Rahman and Barua (2006) explore the possible explanation of the exchange rate movement. They found that there is a strong correlation (-0. 40) between depreciation and export-import gap as a share of reserves; L/C openings for imports also have a positive correlation (0. 45) with volatility of the exchange rate, which implies that the higher the L/C openings the more volatile is the exchange rate.They conclude that high seasonal demand for foreign currency because of increased import bills, systematic withdrawal of excess liquidity by Bangladesh Bank, relatively faster expansion of credit and higher interest rates on various national savings instruments are the reasons behind the int erest rate hike in the money market and depreciation of the nominal exchange rate. William Miles, 2006 discussed about the effect of exchange rate system (both fixed and floating) on the long term growth in the economy.The effect of fixed rate, pegged rate and floating rate has been discussed here briefly on the basis of several literature reviews and the finding is that fixed and intermediate regimes have a clear, significantly negative impact on growth (holds only for emerging markets not for industrial nations. ) In this paper, the author has given an approach to determine if exchange rate regime itself truly extracts an independent effect on growth.Results here indicate that the effect of fixed exchange rates on growth in emerging markets is not direct, but rather contingent on the existence of macroeconomic imbalances and other distortions in place in the domestic economy. These results seem to conform more closely with exchange rate theory, which posits mostly positive, and fe w negative channels for pegged currencies to impact growth over the long run. Asad Karim Khan, June 2009 examines whether the floating exchange rate regime has any impact on the value of Bangladesh taka i,e does it make any lose on the value of the currency.He shows that regime change has no statistically significant impact on the value of Bangladesh currency once foreign exchange reserve is incorporated in the regression model. Younus and Chowdhury (2006) made an attempt to analyse Bangladesh's transition to floating regime and its impact on macroeconomic variables. They find that output growth in Bangladesh performed well in the intermediate and floating exchange rate regimes. Inflation is lower in the intermediate regime despite higher money supply and exchange rate depreciation. They also find that currency depreciation boosted export growth in the floating regime.Chowdhury and Siddique (2006) have analysed the exchange rate pass through to domestic inflation in Bangladesh. 4 Th e experiences of some countries in the region which implemented major changes in their exchange rate regimes in recent years can provide useful lessons for Bangladesh. I have tried to focus the comparison among different economic indicators between Bangladesh and some of the South Asian Countries (Afghanistan, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka) all of which adopted independently floating exchange rate regimes.Trade and financial policy measures are very important for the country’s economy and out of that consideration, Bangladesh has taken a new exchange rate policy according to the obligations of IMF (article number: VIII), as on 24th March,1994 introducing current account fully convertible. At the same time, Bangladesh was under pressure since it is the member of IMF. As a result, Bangladesh took floating exchange rate system in current account on 31st May, 2003. After that, IMF agreed Poverty Reduction and Growth Facility (PRGF) for our country with a new exchange rate system i,e, floating exchange rate system.However, Younus et al (2006) showed that free floating exchange rate system can arrange the prevention of overvaluation of local currency as it might make the export unattractive in the international world as well as alternative items of importable goods became difficult to bit with import goods. He illustrated that the prime goal of free floating system of exchange rate is supposed to avoid the main misalignment of exchange rate, specially, to stop unpredictable appreciation of real rate of exchange that might affect the demand of the total export of the country.The illustrations also included the encouragement of the export situation and decline the shortfall of the current account, control inflationary situation, and increase the position of inward remittances. Since the independence of the country, Bangladesh is following an dynamic exchange rate system that has been replicated in the nominal exchange rate that were de clared by the central bank of the country time to time. Islam (2003) stated 89 modifications in the exchange rate of Bangladesh currency with USdollar since 1983 and among them, 83 were depression.Aziz (2003) illustrated 41 depreciation in nine years (1991-2000). Younus et al (2006) showed that 130 times depreciation took place between 1972 to 2002 in Bangladesh Taka that also reduce balance of payment deficit. So, this paper, correctly identifies the exchange rate as the main important thing for economic changes of the country. After independence, Bangladesh fixed its Taka’s value with British Pound Sterling on 3rd 1972. Since 1972 to 1990 the Taka was overvalued. So there was a huge deficit in Balance of payment that hurt the economy badly.From 1990 the gap began to narrow down. The exchange rate regime worked quite well in terms of balance of payment, inflation, export and remittance. So there were some debate about incipience of this floating and criticism also rose about competence and preparation of Bangladesh Bank. But Bangladesh Bank performed well in managing the ‘new born’. But there is some volatility in the market in recent past. Bangladesh Bank, as a central bank of the country intervened prudently to curve the volatility and market became stable though Taka remains undervalued.The experiences of South East and South Asian countries showed that they had to intervene in the market for smooth moving. The experience supports the Mr. Kindleberger beliefs that â€Å"market work well on the whole† but occasionally â€Å"will be overwhelmed and 5 need help† from a lender of the last resort. (The Economist, July 19th 2003). So the regulator should be watchful about the market’s behavior and intervene when needed without hesitations. In the developing country these kind of intervention should be proactive rather than reactive.Naeem and Rasheed analyzed another important issue of whether stock prices and exchange rat es are related or not has received considerable attention after the East Asian crises. They said that during the crises the countries affected saw turmoil in both currency and stock markets. If stock prices and exchange rates are related and the causation runs from exchange rates to stock prices then crises in the stock markets can be prevented by controlling the exchange rates. Moreover, developing countries can exploit such a link to attract/stimulate foreign portfolio investment in their own countries.Similarly, if the causation runs from stock prices to exchange rates then authorities can focus on domestic economic policies to stabilize the stock market. If the two markets/prices are related then investors can use this information to predict the behavior of one market using the information on other market. They also claimed that most of the empirical literature that has examined the stock prices-exchange rate relationship has focused on examining this relationship for the develo ped countries with very little attention on the developing countries.This paper will assess whether the exchange rate regime change indeed has created any significant impact on the economy of the nation as well as the comparative analysis with the neighboring countries situation. There are some potentialities as well as difficulties in market based system, so in this study there are some recommendations for the regulator and for the market players. To manage the floating exchange rate, full automation as well as transparency is essential in banking sector. As the capital account of our economy is not convertible there is little scope of capital flight.If the inception of floating exchange rate is the beginning to liberalize capital account immediately that won’t be a wise decision. 6 Chapter 3 Exchange Rate Evolution in Bangladesh Introduction: The world economy experienced some sort of fixed and flexible exchange rate. Before 1875 there was Bimetalism of exchange rate and th en the Gold Standard (1875-1914). During Interwar period (1914-1944) the classical Gold Standard broken down and in July 1944 representatives of 44 countries succeeded to establish the ‘Bretton Woods’ system.Again the oil shock in the early 1970s and the dampen of demand broken down this system and world economy shifted to flexible exchange rate. Bangladesh has been experienced two major exchange rate regimes since the country’s Independence from 16th December1971. A Fixed Exchange Rate Regime from 1972 to 1979 and a Floating Exchange Rate Regime since May 2003. Among the time frame from 1971 to 2003, there were different exchange rate arrangements in terms of the currency mechanism, like: Pegged to Pound Sterling (? :1972-1979;Pegged to a basket of major trading partners’ currencies(? as the intervening currencies):1980-1982;Pegged to a basket of major trading partners’ currencies(US$ as the intervening currencies):19831999;Adjusted Pegged System:2 000-2003;Floatig Exchange Rate System: May 30, 2003Present. All the policies of exchange rate system Bangladesh implemented, with the objectives of accelerating exports, reducing import pressure and improve the balance of trade. After independence, Bangladesh fixed its Taka’s value with British Pound Sterling on 3rd 1972.Since 1972 to 1990 the Taka was overvalued. So there was a huge deficit in Balance of payment that hurt the economy badly. From 1990 the gap began to narrow down. The exchange rate regime worked quite well in terms of balance of payment, inflation, export and remittance. 3. 1 Factors Affecting Exchange Rate: Under Floating Exchange Rate Arrangements Exchange Rate is primarily determined by demand for foreign currency and Supply of foreign currency where demand and supply of foreign currency is also affected by some other sensitive factors.According to Jeff. Madura, (International Financial Management) theoretically demand for foreign currency is determined by several factors like, import payments, service payments which includes income payments, debt service payments, foreign investment (outward) and foreign investment (outward). The supply of foreign currency is composed of export Receipt, service receipts which includes income receipts, debt service receipts, foreign aid (inward) and foreign Investment (inward).Besides those some other factors affect the exchange rate movements. The factors are a)Purchasing Power parity; b)Interest rate parity; c) Relative income differential; d)Government Control; e)Expectations etc. 7 3. 2 Performance of previous and current FX-Regime in Bangladesh To evaluate the performance of Bangladesh considering the two different exchange rate regimes, some data comparison have been made among three neighboring countries in South Asia. Those are India, Pakistan and Sri Lanka. 3. 2. Growth rate of GDP Comparing the percentage of growth rate with major neighboring Countries, the following table shows that Bangla desh was more or less in a similar situation before the adoption of floating exchange rate regime. Since 2003 with the new floating exchange rate system, there is also a positive trend of the GDP growth rate except 2009-2010. The global recession affect the overall growth of the country at that time. Table 3. 1: Growth rate of GDP (% per year) Y Country Banglades h India Pakistan Sri Lanka 2001 5. 3 5. 8 1. 8 -1. 5 2002 4. 4 4. 0 3. 1 4. 0 2003 5. 3 8. 2 5. 1 5. 9 2004 5. 7 7. 4 5. 5 5. E 2005 A 2006 R 200 7 6. 4 9. 2 6. 8 6. 8 6. 0 6. 6 7. 6 9. 7 5. 8 5. 8 5. 5 7. 7 200 8 6. 2 6. 7 3. 7 6. 0 200 9 5. 7 8. 0 1. 2 3. 5 2010 5. 8 8. 6 4. 1 7. 6 2011 6. 3 8. 2 2. 5 8. 0 Source: Asian Development Outlook-2004 and 2011, ADB 3. 2. 2 Current Account Balance In comparison to other major South Asian countries, the table no. -2 shows that Bangladesh's achievement in terms of containing current account balance is better after the adoption of floating exchange rate regime (since 2003). It has d one consistently better than some of the neighboring countries like Sri Lanka, Pakistan, and India in all recent years excepting 2005.Table No. 3. 2 Current Account Balance as Percentages of GDP Y 2003 0. 5 0. 7 5. 9 -2. 2 E 2004 0. 0 0. 3 3. 0 -3. 0 A 2006 1. 3 -1. 2 -3. 9 -5. 3 R 2007 1. 4 -1. 4 -4. 8 -4. 3 Country Banglades h India Pakistan Sri Lanka 1999 -1. 5 -1. 1 -3. 0 -3. 6 2000 -1. 1 -0. 8 -0. 4 -6. 4 2001 -2. 3 0. 2 0. 6 -1. 5 2002 0. 4 0. 8 4. 6 -1. 8 2005 -1. 5 0. 3 2. 1 -3. 5 2008 0. 9 -2. 4 -8. 5 -9. 5 2009 2010 2. 7 3. 7 -2. 8 -5. 7 -0. 5 -3. 0 -2. 2 -3. 8 2011 0. 2 -3. 5 -1. 7 -4. 0 Source: Asian Development Outlook-2011, ADB 8 3. 2. Inflation Situation Exchange rate regime and inflation are relevant because a change in the exchange rate is almost certain to cause a change in the domestic price of tradable and indirectly the price of non-tradable also. The international competitiveness of the economy is badly eroded by inflation. It generally encourages capital fligh t, exacerbates income distribution, gives rise to inequities in income distribution and aggravates poverty. The relevant data are presented in the following table no. -3. Table 3. 3: Inflation in Bangladesh and Selected South Asian Countries Y 2002 200 3 2. 8 4. 4 3. 4 3. 5 10. 2 5. 3 3. 1 2. 6 E 200 4 4. 5. 0 4. 0 A 2005 5. 2 5. 0 6. 2 2006 7. 2 5. 2 7. 9 10. 0 R 200 7 7. 2 5. 0 7. 8 15. 8 Country Banglades h India Pakistan Sri Lanka 1999 8. 9 3. 3 5. 7 5. 9 2000 3. 4 7. 2 3. 6 1. 2 2001 1. 6 4. 7 4. 4 11. 0 200 8 9. 9 8. 7 12. 0 22. 6 200 9 6. 7 2. 1 20. 8 3. 4 2010 7. 3 9. 2 11. 7 5. 9 2011 8. 0 7. 8 16. 0 8. 0 Source: Asian Development Outlook-2011, ADB It is showing that there is an increasing trend of inflation since the adaptation of floating exchange rate regime. Data on inflation rates represent period averages. Except for India, which reports the wholesale price index, inflation rates presented are based on consumer price indexes.The higher inflationary situation take plac e due oil and food price hike in the international market as well as several natural disaster like, Sidor, flood etc. 3. 3 Justification of Floating Exchange Rate: From the above mentioned data analysis, it can be said the previous regime performed quite well in certain criteria. The major reasons behind the adoption of new exchange rate system is mainly the government’s commitment to the liberalization of the country’s economy and to take the appropriate steps to create suitable environment of the economy for entering into capital account convertibility regime.Rather than this, there was IMF's ‘conditionalities' to enter into new floating exchange rate regime. 3. 4 The Transition from Fixed to Float: To meet up the economic demand and to fulfill the IMF conditionality, on 29 May, 2003 Bangladesh Bank issued a circular stating- effective from 31st May, 2003, Bangladesh Bank floated its exchange rate and followed a fully market based exchange rate for Taka. Under this arrangement, exchange rate is determined on the basis of demand and supply of the respective currencies.Immediately after the inception of floating exchange rate banks, economists, currency traders and businessmen have welcomed the deregulation of the exchange rate saying that 9 the country's foreign trade and remittance would get a boast up due to it and it would make the currency market more efficient and effective. Since the introduction there is no unusual raise of exchange rate till mid 2004. Most of the time Taka maintains appreciating position during this period and Bangladesh Bank show a tremendous performance managing the ‘new born' exchange rate system.During mid 2004, Taka faced significant volatility against USD and it continued up to August 2004. After that period, the volatility of exchange rate of Taka against USD eased but resulting to appreciated USD till mid January 2005. In recent times, Taka has depreciated significantly against USD in the inter-bank m arket. This has happened as because of price hike in oil price and scrap vessel in the international market created a surge on import settlements. Figure3. 4: Exchange Rate Movement immediately after inception of Floating Exchange Rate Movment 58. 7 58. 65 58. 6 58. 55 58. 5 58. 45 58. 4 58. 35 58. 3 58. 25 58. Exchange Rate TK/$ Jun'-01 Jun'-04 Jun'-08 Jun'-11 Jun'-15 Jun'-18 Jun'-22 Jun'-25 Jun'-29 July'-03 July'-07 July'-10 July'-14 July'-17 July'-21 July'-24 July'-28 Banking days Source: Bangladesh Bank Unpublished Data Behavior of Real Effective Exchange Rate (REER) and Nominal Exchange Rate: REER is considered as a guiding FX-rate to the policy maker as well as the market participants and it also shows the international competitiveness of countries goods and services. The policy makers are always tried to keep the Nominal Exchange Rate near to the REER. Before 1990 Taka was overvalued (see table no-01,02 and 03. that distorted our international competitiveness and that was the causes of prolonged Balance of Payment crisis. Figure3. 5: Comparison of month end Real Effective Exchange Rate (REER) and Nominal Exchange Rate between 2003-2004. 10 July'-31 62. 00 61. 00 60. 00 Behavior of REER and Nominal FX-Rate Rate TK/$ 59. 00 58. 00 57. 00 56. 00 55. 00 54. 00 REER-2003 53. 00 Nominal TK/$-2003 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec REER-2004 Nominal TK/$-2004 Months Source: Bangladesh Bank Unpublished Data After 1990, Taka remained undervalued. The gap between Nominal Exchange Rate and REER were widened over the period.Before inception of floating exchange rate Taka was almost running on a free float for the last 12-15 month as rates were decided according to demand-supply situation and liquidity in market. Bangladesh Bank was also not virtually selling any dollar that time. This means the market has already factored in floating exchange rate. Moreover, before inception Bangladesh Bank took some measures for strengthening regulation, such as, keep ing close observation of Authorized Dealer’s (AD’s) daily activities; especially on ‘Open Position’, gave pressure for reconciliation of NOSTRO account balance, encourage every bank to set up dealing room and ressurized to make payment in due time etc. So we can obviously say that way to the floating exchange rate was prepared. 11 Chapter 4 Performance of Floating Exchange Rate System On Macro Economy of Bangladesh Introduction of floating exchange rate was debatable issue and also there were some criticisms about the competence of Bangladesh Bank's from some corner. But Bangladesh Bank performed a tremendous performance. There was no volatility; no speculation in price and market behaves rationally. If we consider the market statistics, we find that macro economic variables have positive performances over the period of time.Three major variables have been considered for evaluating the impact of exchange rate with them. The variables are Export, Workers Re mittances and Foreign reserve. 4. 1 The Export Situation: The export trend from 1998 to 2011 shows an increasing trend. It is shown here that there is upward trend of export after 2003,i. e, after adopting the floating exchange rate regime, the export has a robust growth in the economy. Figure:4. 1: The Export Volume in US$ Source: Bangladesh Bank Quarterly, January-March 2011 During the global recession, the export trend of Bangladesh was not that much affected mostly for the RMG sector.In the FY 09 and FY 10, the export volume increased significantly. 4. 2 Enhancement of Workers Remittance: The Inward remittances from Bangladeshi nationals working abroad remained strong in FY10 even in the face of global economic slowdown and continued to play an important role in strengthening the current account. Receipts on this sector increased by 13. 4 percent to USD 10987. 40 million in FY10 from USD 9689. 26 million in FY09. The underlying reason was that Bangladesh Bank has simplified the approval policy of drawing arrangements between foreign exchange houses and domestic banks.As a result, 40 banks 12 have been allowed for establishing 885 drawing arrangements with 300 exchange houses all over the world for collecting remittances, (of which approximately 650 drawing arrangements with 250 exchange houses are operative now). Figure-4. 2: The Workers Remittance Source: Bangladesh Bank Quarterly, January-March 2011 Considering the growth rate of workers’ remittances, it has been observed that the rate is quite higher after the free floating exchange rate regime that is 20. 52 % (2003-2010) than that of fixed exchange rate regime of Bangladesh which is calculated as 11. 9% (19932002). The increasing amount of workers remittance helps to balance the trade deficit in a prudent manner. 4. 3 Reserve Position: The amount of foreign exchange reserve has been increased significantly over the last couple of years. During the FY 2003 to FY 2005, the trend was quite steady and flat. But, it has an upward trend after FY 2007. The main sources of foreign reserve are workers remittance, foreign loans and grants and exports. 13 Figure-4. 3: The Foreign Reserve Position Period Reserves($) 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 469. 6 2705 2930 3483. 8 5077. 2 6148. 8 7470. 9 10749. 7 10911. 6 Source: Bangladesh Bank Quarterly, January-March 2011 After the inception of floating exchange rate regime, the foreign exchange reserve boosted up due to huge amount of workers remittance and increasing trend of export. 4. 4 The Growth Rate of GDP: The GDP growth rate reaches upto 6. 7% during FY 11. From 1994 to 2010, the average growth rate of GDP was 5. 47% reaching at high of 6. 63% in June 2006. The record low rate was 4. 08% during June 2004. For the last couple of years the growth rate was 5% above and Bangladesh is onsidered as a developing country. Figure-4. 4: Bangladesh GDP Growth Rate Source: Bangladesh Bureau of Statistics,2011 14 4. 5 The relationship among the variables: The relationship between the exchange rate and three variables i,e, export, remittance and reserve reflects quite positive in correlation. The correlation has been computed considering the data from 2002-2011. Correlation Exchange Rate Export 0. 928315219 Remittance 0. 859373146 Reserve 0. 825444493 One regression analysis has been done with workers remittance and exchange rate.The purpose of the quantitative analysis is to identify if there is any relationship between exchange rate and workers remittance of Bangladesh. The monthly data of workers remittance from the financial year 2007-2008 to financial year 2011-2012 has been taken for the calculation. The regression model, exchange rate is independent variable and remittance is dependent variable. The regression model is: Y=66. 15+. 010385 remittance The value of R square is . 37 which means that the regression model explains 37% variation in exchange rate. T he coefficient is very low which is and P value is quite high that is 3. 74.So, the remittance does not show any significant impact on foreign exchange rate. 15 Chapter 5 Exchange Rate Situation 5. 1 Exchange Rate Movement: In the recent Taka depreciates against US$ drastically: Over the period, July 2010-January 2012, from Tk 70 to Tk 86 — a depressing 23% fall down. Figure-5. 1: Exchange Rate Movement Source: Website OANDA The sharp fall of taka against US dollar continues for last couple of months. US dollar has been weakening against many other strong currencies like Euro, SF, Yen and GBP but getting stronger against Bangladesh Taka. Exchange rate depreciation creates the economy in a challenging situation.Continuous depreciating tendency higher the inflation rate that ultimately increase the trade deficit. The ongoing depreciation of Bangladeshi taka is becoming the challenge for the central bank as well as the Government. The increasing trend of the trade deficit (figur e: 7) also shows the possibility of the shortage of supply of the foreign currency i,e, US$ in the market. 5. 2 Reasons for Currency Depreciation: The reasons behind the currency depreciation are influenced by economic fundamental, exchange rate regime and Trading rules. There is a slow trend of capital inflow in the country for the last couple of years.The main reasons for that are low tendency of foreign direct investment and increasing trend of trade deficit. 16 5. 2. 1 High Inflation: Inflation is appearing as a major threat in the economy in the recent past. Inflation had a moderate trend upto 2003 within 6%. It started increasing from 2004 and got sharp rise in 2008-2009 and the increasing trend is still continuing. The main cause of high inflation in Bangladesh is oil and food price hike in abroad. Figure 5. 2: Inflation Source: Monthly Economic Trend-Bangladesh Bank, January 2012 The high level of inflation in the economy leads to lower the value of local currency taka.To co ver the deficit budget, Government borrowings from the Central Bank (BB) and overall money supply increased leads to high inflation in the market. 5. 2. 2 Low Foreign Direct Investment: The growth rate of foreign direct investment is showing a declining trend. The data has been used from 1996 to 2011. After 1998 and so on, the trend started to decline sharply. It increased a little bit during 2004-2005 but again has a very declining trend. 17 Figure-5. 3: Growth Rate of Foreign Direct Investment Source: Monthly Economic Trend-Bangladesh Bank, January 2012 In the recent past, the FDI growth rate is severely low.So, proper steps are supposed to be taken by the government authority. 5. 2. 3 Trade Deficit: Though the export volume has an increasing trend since the inception of floating exchange rate regime, there is huge amount of trade deficit with an increasing trend. 18 Figure: 5. 4 Trade Deficit of Bangladesh Source: Monthly Economic Trend-Bangladesh Bank , January 2012 The amount o f import has been increased sharply after 2006-2007. The gap between export and import becomes huge during the last financial year 2010-2011. Due to huge import payment, government debt has increased significantly in the country and demand for foreign currency increased. 9 Chapter 6 Recommendations and Conclusion Considering the above mentioned discussions, some recommendations have been formulated in order to bring stability in the foreign exchange market in the short run and long run for the Government and Bangladesh Bank i,e, the central bank of the country. Those are discussing as follows: 6. 1. Control Inflation: Effective measures are needed to be taken by the central bank to control inflation by reducing money supply in the economy. The formulation of the tighten monetary policy by the central bank is an important factor for controlling inflation.But the deficit budget of the Government creates huge Government Debt and prolong inflationary atmosphere. The related factors for reducing deficit budget 6. 2. Reduce Trade Deficit: One of the important components to reduce the trade deficit is to enhance export volume of goods and services. Bangladesh is a import depended country. The main importable items are petroleum and food. Local industrialization is utmost important specially in the food sector (substitute food items production) and other exportable items to reduce huge liability of the Government. 6. 3 Enhancing Foreign DirectInvestment: Sufficient inflow of foreign direct investment could enhance the capital inflow in the country for long term. Bangladesh Government has specific policy for inviting FDI. Ensuring good governance, Infrastructural development, Utility, political stability will help to promote more investment from abroad in the country. 6. 4 Short Term Foreign Borrowings: Borrowings from abroad is another option for supplying liquidity in the market. But the problem of short-term borrowing is that the country may fall into â€Å"Debt-tr ap† due to be unable to pay the money on time.Once the foreign currency injects in the market, it is difficult to recollect form the market as well. The Central Bank of Philippines in early 1990 can be remembered here. Due to short-term borrowing to meet the local market demand, got huge foreign liability. Continuous losses eroded it’s capital base and made it bankrupt in 1993. It took 25 years to reestablish the new central bank in that country. So, Instead of foreign borrowings, Concessionary loans at a low interest rate from World Bank and ADB and other bilateral donors might be a better option to meet the ongoing gap in the market. . 5 Effective Capital Market: The capital market development is utmost important in order to bring the steady situation in FX market. Ensuring enough flow of Foreign Portfolio Investment (FPI), good governance and security in the capital market is time demand. 6. 6 Derivatives Market: Introduction of various derivative products as options , currency swap, interest cap, interest swap, futures, forwards etc, as well as ensuring huge portfolio investment might bring the positive impact in the exchange rate market. 20 6. Formation of Domestic FX Market: A formal forex market forum should be created, with the participation of independent professional bodies and with representation from the dealers association, Bangladesh Bank and other relevant government officials. This forum would provide the logistic support and platform for the forex market. Ideally, this forum would develop a secured web-based market to which only the members or participating organizations would have access. From this website, all the logistic support required for completing the forex dealings among the members/participating organizations could be provided. 6. Autonomy of the Central Bank: The autonomy of the central bank is desirable issue for the economy. The central bank should operate and perform independently with full automation. Conclusion: Th is study shows that floating exchange rate regime has constructive effect on economic growth. The transition period from Fixed rate regime to Floating rate regime was quite smooth and stable. There is significant growth in the fundamental economic variables on the long path of the new exchange rate regime. The trend of export, workers’ remittances and foreign reserves have been analyzed and found considerable growth on these variables.Nevertheless, the ongoing exchange rate depreciation along with high inflation is becoming a challenging issue for the regulators and Government as well. The gap between demand and supply of foreign currency in the market is getting bigger in the high inflationary economy which lead continuous loses in the value of the local currency. The key reasons have been found for the currency depreciation are inflation, government debt, trade deficit, low FDI etc. The study recommended some issues for Government’s and Central’s bank’s part. The regulation should be proactive rather than reactive.There are some potentialities in this new regime; to reap this potentiality, Government as well as regulators should take effective steps. 21 REFERENCES Asian Development Bank. 2011. Asian Development Outlook 2010 Update. Asian Development Bank. 2006. Asian Development Outlook 2005, ADB: Manila, Philippines. Asian Development Bank. Manila,Philippines. 2005. Asian Development Outlook 2005, ADB: Asad Karim Khan Priyo, June 2009,Impact of the Exchange Rate Regime Change on the Value of Bangladesh Currency. Bangladesh Bank Annual Reports. 2010.Dhaka Bangladesh. Bangladesh Bank Monthly Economic Trend. January 2012 Bangladesh Bank, Scheduled Bank Statistics. July-September 2011. Financial Sector Review, 2006, Bangladesh Bank. Hossain, Akter. 2002, Exchange Rate, Capital flows and International Trade. Hossain, M. A. , and Alauddin, M. , (Fall 2005), Trade Liberalization in Bangladesh: The Process and Its Impact on Macro Variabl es Particularly Export Expansion, The Journal of Developing Areas, Volume 39, Issue 1, 127-150. Jeff. Madura, International Financial Management, 10th edition. Islam, Mirza A. 2003): â€Å"Exchange Rate Policy of Bangladesh – Not Floating Does Not Mean Sinking†, Keynote Paper presented at dialogue organized by Centre for Policy Dialogue, Bangladesh – January 2, 2003. Nusrate Aziz . June 2008. The Role of Exchange Rate in Trade Balance: Empirics from Bangladesh. The IMF, Annual Report 2010, Financial operations and transactions, The International Monetary Fund. Younus, S. and Chowdhury, M. I. , (December 2006), An Analysis of Bangladesh’s Transition to Flexible Exchange Rate Regime, Working Paper Series. 22 APPENDIX I Trade Deficit of Bangladesh Export Import Year (in million USD) (in million USD) 1994-95 3472. 5250. 6 1995-96 3882. 4 6237. 9 1996-97 4418. 3 6436. 8 1997-98 5161. 2 6768. 0 1998-99 5312. 8 7205. 4 1999-00 5752. 2 7536. 6 2000-01 6467. 3 840 1. 5 2001-02 5986. 1 7686. 0 2002-03 6548. 4 8691. 8 2003-04 7603. 0 9812. 9 2004-05 8654. 5 11832. 1 2005-06 10526. 2 13271. 7 2006-07 12177. 9 15441. 0 2007-08 14110. 8 19481. 4 2008-09 15565. 2 20291. 4 2009-10 16204. 7 21388. 2 2010-11 22928. 2 32398. 4 Source: Monthly Economic Trend-Bangladesh Bank , January 2012 Trade Deficit (in million USD) -1778. 1 -2355. 5 -2018. 5 -1606. 8 -1892. 6 -1784. 4 -1934. 2 -1699. 9 -2143. 4 -2209. 9 -3177. 6 -2745. 5 -3263. 1 -5370. -4726. 2 -5183. 5 -9470. 2 23 Yearly Reserve Position In million USD Reserves($) Period 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Source: Monthly Economic TrendBangladesh Bank , January 2012 2469. 6 2705 2930 3483. 8 5077. 2 6148. 8 7470. 9 10749. 7 10911. 6 24 Yearly data of Workers Remittance: Remittances Year/Month 2011-2012* 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 1999-2000 1998-1999 1997-1998 199 6-1997 1995-1996 1994-1995 1993-1994 1992-1993 In million In million US dollar Taka Growth Rate 2117. 7 11650. 32 10987. 4 9689. 26 7914. 78 5998. 47 4802. 41 3848. 29 3371. 97 3061. 97 2501. 13 1882. 1 1949. 32 1705. 74 1525. 43 1475. 42 1217. 06 1197. 63 1088. 72 944. 57 157668. 7 829928. 9 760109. 59 666758. 5 542951. 4 412985. 29 322756. 8 236469. 7 198698 177288. 2 143770. 3 101700. 1 98070. 3 81977. 8 69346 63000. 4 49704 48144. 7 43549 36970. 4 Average Rate Growth 13. 39772078 22. 41982721 31. 94664639 24. 90541207 24. 79334977 14. 12586707 10. 12420109 22. 42346459 32. 8903884 -3. 448382 14. 28001923 11. 82027363 3. 389543316 21. 22820568 1. 622370849 10. 00349034 15. 2609 20. 51706112 11. 89409131Source : Foreign Exchange Policy Department, Bangladesh Bank Bangladesh Bank Annual Report 2009-2010 Growth rate is self calculated 25 Yearly data of Inflation Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Point to Point 1. 66 3. 58 5. 03 5. 64 7. 35 7. 54 9. 2 10. 04 2. 25 8. 7 10. 17 11. 59 12 months average 1. 94 2. 79 4. 38 5. 83 6. 48 7. 16 7. 2 9. 94 6. 66 7. 31 8. 8 10. 91 Source: Monthly Economic Trend-Bangladesh Bank , January 2012 26 Yearly data of Export, Remittance, Reserve and Exchanger Rate (In million USD) Workers Year FX Rate Export Remittance in mil US$ (in mil US$) 62. 691 2501. 13 FY02 5985. 89 63. 2216 3061. 97 FY03 6548. 54 64. 0869 3371. 97 FY04 7602. 99 68. 0508 3848. 29 FY05 8654. 52 73. 9865 4802. 41 FY06 10526. 16 74. 1681 5998. 47 FY07 12177. 86 73. 4636 7914. 78 FY08 12685. 4 73. 8228 9689. 26 FY09 14170. 7 74. 5518 10987. 4 FY10 14763. 8 79. 1877 11650. 32 FY11 20313. 8 Source: Monthly Economic Trend-Bangladesh Bank , January 2012 Reserve (in mil US$) 1582. 9 2469. 6 2705 2930 3483. 8 5077. 2 6148. 8 7470. 9 10749. 7 10911. 6 27 Monthly data of Remittance and Exchange Rate Year Month Remittance ( In million USD) Ex rate (average) Year Month Remittance ( In million USD) Ex rate (average) 007-08 2008-09 2009-10 July August September October November December January February March April May June July August September October November December January February March April May June February March April May June July August September October November December January February March April May June 567. 11 470. 95 590. 67 559. 05 617. 39 635. 34 710. 74 689. 26 808. 72 781. 71 730. 26 753. 58 820. 71 721. 92 794. 18 648. 51 761. 38 758. 03 859 784. 47 885. 67 840. 99 895. 3 850. 5 784. 47 885. 67 840. 99 895. 3 850. 5 885. 38 935. 15 887. 57 900. 70 1050. 4 873. 86 952. 39 827. 96 956. 49 922. 16 903. 05 892. 15 73. 6518 73. 4389 73. 5663 73. 3004 73. 2946 73. 473 73. 4672 73. 4063 73. 2738 73. 4847 73. 2841 73. 3473 73. 38 73. 4947 73. 2884 73. 6468 73. 7971 73. 691 73. 7961 73. 8126 73. 8073 74. 1052 73. 9459 73. 9413 73. 8126 73. 8073 74. 1052 73. 9459 73. 9413 73. 9214 73. 6394 73. 7567 73. 7551 73. 5378 73. 8549 73. 8181 73. 9592 74. 2051 74. 0648 74. 4125 74. 6026 2010-11 2011-12 July August September October November December January February March April May June July August September October November December 57. 31 963. 92 837. 71 923. 85 998. 64 969. 10 970. 54 986. 97 1102. 98 1001. 97 998. 42 1038. 91 1015. 58 1101. 79 855. 44 1039. 48 908. 79 1147. 22 74. 5447 74. 4778 74. 5078 75. 0673 75. 3246 75. 5892 75. 8669 76. 0948 76. 8504 77. 8919 78. 42 78. 843 79. 6805 79. 534 79. 7888 80. 9414 81. 9104 84. 1857 28 Source: Monthly Economic Trend-Bangladesh Bank , January 2012 Regression Analysis: Exchange Rate and Remittance SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0. 610778 0. 373049 0. 360993 2. 020275 54ANOVA df Regression Residual Total 1 52 53 SS 126. 2866232 212. 2385435 338. 5251666 Standard Error 1. 622261594 0. 001867047 Lower 95. 0% 62. 90219774 0. 006638903 Upper 95. 0% 69. 41280968 0. 014131912 MS 126. 2866 4. 08151 F 30. 94114904 Significance F 9. 36275E-07 Coefficients Intercept X Variable 1 66. 1575 0. 010385 t Stat 40. 78103 5. 562477 P-value 3. 7402E-41 9. 36275E-07 Lower 95% 62. 90219774 0. 006638903 Upper 95% 69. 41280968 0. 014131912 2 FOREIGN DIRECT INVESTMENT (FDI) INFLOWS AND STOCKS BY COMPONENTS IN BANGLADESH (In million US$) Inflows Period 996-97 Jul-Dec Jan-Jun 1997-98 Jul-Dec Jan-Jun 1998-99 Jul-Dec Jan-Jun 1999-00 Jul-Dec Jan-Jun 2000-01 Jul-Dec Jan-Jun 2001-02 Jul-Dec Jan-Jun 2002-03 Jul-Dec Jan-Jun 2003-04 Jul-Dec Jan-Jun 2004-05 Jul-Dec Jan-Jun 2005-06 Jul-Dec Jan-Jun 2006-07 Jul-Dec Jan-Jun 2007-08 Jul-Dec Jan-Jun 2008-09 Jul-Dec Jan-Jun 2009-10 Jul-Dec Jan-Jun 2010-11 JulyDec. Jan-Jun Source : Stocks Total 366. 85 157. 63 209. 22 603. 30 366. 07 237. 23 394. 10 339. 23 54. 87 383. 22 254. 25 128. 97 563. 92 449. 67 114. 26 393. 76 240. 21 153. 56 379. 18 174. 75 204. 43 284. 16 145. 82 138. 34 803. 78 322. 06 481. 72 744. 61 363. 54 381. 07 792. 4 411. 41 381. 33 768. 69 285. 03 483. 66 960. 59 602. 65 357. 94 913. 02 342. 22 570. 80 Equity Capital 136. 71 40. 79 95. 92 349. 02 236. 14 112. 88 195. 54 167. 63 27. 91 152. 98 109. 56 43. 42 372. 27 306. 76 65. 51 230. 11 168. 27 61. 84 163. 98 71. 97 92. 01 111. 23 64. 13 47. 10 361. 14 108. 79 252. 35 447. 22 173. 24 273. 98 464. 50 229. 67 234. 83 545. 69 166. 78 378. 91 535. 42 430. 34 105. 08 515. 14 113. 47 401. 67 Reinvested Earning 151. 27 79. 92 71. 35 181. 31 92. 10 89. 21 120. 71 100. 67 20. 04 80. 71 56. 19 24. 52 81. 00 53. 25 27. 75 84. 66 37. 26 47. 40 164. 97 69. 42 95. 55 161. 38 74. 58 86. 80 297. 1 152. 99 144. 12 198. 64 103. 36 95. 28 281. 00 169. 46 111. 54 197. 71 101. 70 96. 01 336. 61 149. 72 186. 89 331. 10 178. 05 153. 05 Intracompany Loans 78. 87 36. 92 41. 95 72. 97 37. 83 35. 14 77. 85 70. 93 6. 92 149. 53 88. 50 61. 03 110. 66 89. 66 21. 00 79. 00 34. 68 44. 32 50. 23 33. 36 16. 87 11. 55 7. 11 4. 44 145. 53 60. 28 85. 25 98. 75 86. 94 11. 81 47. 24 12. 28 34. 96 25. 29 16. 55 8. 74 88. 56 22. 59 65. 97 66. 78 50. 7 0 16. 08 Equity Capital †¦ †¦ †¦ †¦ †¦ †¦ †¦ †¦ †¦ 1010. 45 968. 83 1010. 45 1182. 07 1215. 54 1182. 07 1408. 98 1325. 97 1408. 98 1579. 15 1472. 70 1579. 15 1854. 10 1818. 86 1854. 10 2123. 50 1940. 7 2123. 50 2468. 63 2268. 39 2468. 63 2857. 96 2736. 50 2857. 96 3719. 99 3068. 07 3719. 99 3909. 60 3823. 32 3909. 60 5014. 96 4426. 69 5014. 96 Reinvested Earning †¦ †¦ †¦ †¦ †¦ †¦ †¦ †¦ †¦ 505. 89 492. 80 505. 89 470. 44 470. 37 470. 44 505. 13 494. 15 505. 13 637. 75 550. 10 637. 75 708. 43 649. 08 708. 43 880. 01 822. 04 880. 01 974. 18 904. 81 974. 18 1146. 22 1133. 87 1146. 22 873. 76 1109. 59 873. 76 903. 65 742. 04 903. 65 544. 21 474. 06 544. 21 Intracompany Loans †¦ †¦ †¦ †¦ †¦ †¦ †¦ †¦ †¦ 459. 04 428. 96 459. 04 454. 29 475. 85 454. 29 448. 82 382. 08 448. 82 410. 64 427. 89 410. 64 321. 16 408. 03 321. 16 362. 10 328. 7 362. 10 322. 72 363. 95 322. 72 364. 23 316. 86 364. 23 210. 68 221. 12 210. 68 325. 94 250. 66 325. 94 410. 29 378. 17 410. 29 Total †¦ †¦ †¦ †¦ †¦ †¦ †¦ †¦ †¦ 1975. 38 1890. 59 1975. 38 2106. 80 2161. 76 2106. 80 2362. 93 2202. 20 2362. 93 2627. 54 2450. 69 2627. 54 2883. 69 2875. 97 2883. 69 3365. 61 3090. 68 3365. 61 3765. 53 3537. 15 3765. 53 4368. 41 4187. 23 4368. 41 4804. 43 4398. 78 4804. 43 5139. 19 4816. 02 5139. 19 5969. 46 5278. 92 5969. 46 118. 31 211. 57 12. 64 131. 64 233. 62 71. 26 Statistics Department, Bangladesh Bank. 342. 52 436. 52 5196. 21 5143. 70 533. 65 612. 69 342. 21 462. 67 6072. 07 6219. 06 3