Welcome to Applied Macroeconomic Centre

A theory is appropriate as long as it fits into the fact; when a theory doesn't fit in the fact, it's wise to walk with the fact.

Thursday, December 15, 2011

News on loosing Taka value

So, news on the drastic depreciation of Taka against US$ in the past few weeks keeps taking a significant place in the business media, because of its various implications for the country as well as consumer.

Here are some of the news and analyses on the issue.

Dollar hits all-time high in kerb market.
Dollar crunch intensifying.

There are several implications for exchange rate depreciation:

1. From the consumer perspective, it will definitely have an direct impact on prices of imported goods. Prices of those will go up. If those goods are necessary products, then people sill suffer. If those are not necessary, then may be imports of those items will decline.

2. If there are domestic substitutes of imported products, then demand for those product will increase and accordingly production of those. In this way, there is an investment opportunity of those products. Prices of substitute products? well, it depends on the elasticity.

3. It will definitely improve the export competitiveness because other competing currencies including Indian Rupees also have been depreciating against US$.

No comments:

Post a Comment