According to an article published by the Daily Star in August, 2021, "After buying a record amount of US dollars last year, Bangladesh Bank has begun selling the American greenback. The central bank purchased the dollar amounting to $205 million in July. But it has started selling the greenback from this month". The main purpose behind this action is to help protect the value of the BDT against the USD. Based on your knowledge of the foreign exchange market, explain what the BB is actually trying to do and how it may affect the current account balance of Bangladesh, holding everything else constant. Note: Greenback means USD.
According to an article published by the Daily Star in August, 2021, "After buying a record amount of US dollars last year, Bangladesh Bank has begun selling the American greenback. The central bank purchased the dollar amounting to $205 million in July. But it has started selling the greenback from this month". The main purpose behind this action is to help protect the value of the BDT against the USD. Based on your knowledge of the foreign exchange market, explain what the BB is actually trying to do and how it may affect the current account balance of Bangladesh, holding everything else constant. Note: Greenback means USD.
Chapter29: International Finance
Section: Chapter Questions
Problem 4P
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