The Bangladeshi government tightly controls the exchange rate of the taka against the U.S. dollar and major regional currencies. During the last decade the value of the currency showed a steady decline, mainly due to the devaluation of many of the neighboring currencies
|Exchange rates: Bangladesh|
|taka (Tk) per US$1|
|SOURCE: CIA World Factbook 2001 [ONLINE].|
(especially the Indian and Pakistani rupees). In 1995 the Bangladeshi taka was valued at 40.278 taka per US$1; in January 2000 the value of the taka declined to 51.000 taka per US$1. According to the IMF, the Bangladesh Central Bank has followed a policy of gradual depreciation of the taka against the U.S. dollar since the middle of the 1990s, devaluing the taka in gradual steps of 1 to 2 percent 2 or 3 times a year. The taka's market value has been protected by the large sums of foreign currencies Bangladesh receives every year through aid transfers and through remittances from overseas workers. The taka is still not fully convertible. The government periodically revises its exchange control regulations, introducing further liberalization of the controls. The government lifted restrictions on the repatriation of the profit and dividends from foreign direct investments (in the industrial sector); however, non-residents are not allowed to buy money market instruments or treasury bills .
During the period between 1970 and 1980 inflationary pressure was relatively small, as the country's economy was closed to outside influences and was tightly controlled by the government. In the 1990s consumer prices became more volatile, fluctuating between a low of 2.9 percent and a high of 8.9 percent a year, due to the liberalization and gradual opening up of the national economy to international competition.
The Bangladeshi banking system suffers from a lack of capital and poor management. Other problems include banks' exposure to corruption and to bad loans allegedly made to politically well-connected businessmen. There are 43 private banks in the country, including 29 domestic and 14 foreign banks, but most of them are active in major urban areas (Dhaka and Chittagong). The foreign banks are represented by such names as the Scotiabank of Canada and Societe Generale of France.
The 1997 Asian financial crisis did not bring damages in the scale of the economic and financial downturn in Indonesia, although it did negatively affect Bang-ladeshi exports. This escape was mainly due to the limited size of the Bangladeshi market, existing currency exchange controls and the relatively closed nature of its economy. Nevertheless, the Bangladeshi taka depreciated between 1997 and 1999 at a faster rate, declining from Tk43.892 in 1997 to Tk49.085 in 1999.
Bangladesh has 2 stock exchanges, the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE; opened in 1995). Share prices shot up after the 1996 parliamentary election and market capitalization reached US$6.0 billion in November 1999; however, share prices fell dramatically the following year, with some shares losing up to 60 or 70 percent of their value. The all share indexes both in the DSE and the CSE still remain far below those of the 1996 levels.