“A Study on the Foreign Exchange Policy and Its Impact on

Economic Development of Bangladesh”

[Internship report submitted to the Department of Finance, Jagannath University to fulfill the
degree of Bachelor of Business Administration (BBA)]

Supervised By:
Dr. Mohammad Sogir Hossain Khandoker
Chairman & Professor
Department of Finance
Jagannath University, Dhaka

Submitted By:
Nayan Saha
ID No: B180203071
Session: 2018-19
Department of Finance
Jagannath University, Dhaka

Faculty of Business Studies

Jagannath University, Dhaka

Date of Submission: January 3, 2024

 Letter of Transmittal

Date: January 3, 2024

Dr. Mohammad Sogir Hossain Khandoker

Chairman & Professor
Department of Finance
Jagannath University, Dhaka

Subject: Submission of Internship Report on “A Study on the Foreign Exchange Policy

and Its Impact on Economic Development of Bangladesh”

Respected Sir,
It gives me immense pleasure to submit the internship report on “A Study on the Foreign
Exchange Policy and Its Impact on Economic Development of Bangladesh” a partial
requirement of the BBA program. This report is prepared in the supervision of my internship
supervisor Dr. Mohammad Sogir Hossain Khandoker, Chairman & Professor, Department
of Finance, Jagannath University. This report is the result of the knowledge which has been
acquired from the internship program.

I tried my level best for preparing this report. I fervently hope that you will find this report
worth reading. Care was taken when preparing this report to make this report as error-free as
possible. Hope you will appreciate the hard work and excuse the errors, mistakes or any
emissions that may have made in this report unintentionally.

Thank you for your kind supervision.

Sincerely yours,

______________
Nayan Saha
ID No: B180203071
Session: 2018-19
Department of Finance
Jagannath University, Dhaka

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 Certificate of Supervisor

This is to certify that Nayan Saha, a regular student of BBA 13th Batch, ID No: B180203071,
and Session: 2018-19 of Department of Finance, Jagannath University has completed his
internship report on the topic “A Study on the Foreign Exchange Policy and Its Impact on
Economic Development of Bangladesh” as a partial fulfillment of Bachelor of Business
Administration (BBA) degree from the Faculty of Business Studies, Jagannath University,
Dhaka, Bangladesh .

The report has been prepared under my guidance and is a record of the bona fide work carried
out successfully.

_________________________
Dr. Mohammad Sogir Hossain Khandoker
Chairman & Professor
Department of Finance
Jagannath University, Dhaka

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 Student’s Declaration

I here announce that the extensive study entitled “A Study on the Foreign Exchange Policy
and Its Impact on Economic Development of Bangladesh” prepared in partial
accomplishment of the requirement for the award of the degree Bachelor of Business
Administration (BBA) from Jagannath University, Dhaka-1100.

This report is my original work and not put forward for the award of any other degree / diploma
/ fellowship or other similar term or honor.

Sincerely yours,

______________
Nayan Saha
ID No: B180203071
Session: 2018-19
Department of Finance
Jagannath University, Dhaka

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 Acknowledgement

I feel immensely pleased to have an opportunity, on the very occasion of submitting my

internship report. First and foremost, I would like to thank GOD, the omniscient and
omnipotent, who bestowed me the capability of completing my internship report and the
internship as well.

I would like to offer my heartfelt thanks and gratitude to my internship advisor Dr.
Mohammad Sogir Hossain Khandoker, Chairman & Professor, Department of Finance,
Jagannath University. His instructive advice and guidance have emerged as stepping stones in
making this report a fruit. This report has smelt the scent of my creativity only as he entrusted
his every belief in my capability and analytical ability in preparing the report.

My pleasure turns blooming to offer thanks to Mohammad Nuruyddin Haider, Joint Director,
Foreign Exchange Policy Department, Bangladesh Bank, Head office, Dhaka for his genial
support, guidance, and valuable information, which helped me to complete my report work.

I would like to express my great appreciation to Mohammad Auwal Islam, Joint Director,
Foreign Exchange Policy Department, who has been very helpful and make a friendly
environment in the department and in the preparation of this report.

I am grateful to the concern officials of the Foreign Exchange Investment Department for
providing me the valuable information and knowledge.

I must mention the wonderful working environment and group commitment of this bank that
has enabled me a lot deal to do and observe the banking activities during my internship period.
Finally, my sincere gratitude goes to my family, friends, and classmates who helped me
whenever I needed.

Sincerely yours,

______________
Nayan Saha
ID No: B180203071
Session: 2018-19
Department of Finance
Jagannath University, Dhaka

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 List of Acronyms
BB = Bangladesh Bank

RBI = Reserve Bank of India

HRD = Human Resources Department

FEPD = Foreign Exchange Policy Department

FEID = Foreign Exchange Investment Department

FEMLIM = Foreign Exchange Market and Large Import Monitoring

FERA 1947 = Foreign Exchange Regulation Act 1947

GFET = Guidelines for Foreign Exchange Transaction

AD = Authorized Dealer

ICC = International Chamber of Commerce

UCPDC-600 = Uniform Customs and Practices for Documentary Credit - 600

FDIPA = Foreign Direct Investment Promotion Project

TSL = Two Step Loan

JICA = Japan International Cooperation Agency

PFI = Participating Financial Institution

NBFI = Non-Bank Financial Institution

GDP = Gross Domestic Product

GNI = Gross National Income

GNP = Gross National Product

FDI = Foreign Direct Investment

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 Executive Summary

As per the requirement of the BBA program from Department of Finance, Jagannath
University, an internship of 3 (three) months needed to be completed. I had the privilege of
getting enrolled on the internship program of Bangladesh Bank. I was offered FEPD and FEID
by the HRD 2 of Bangladesh Bank.

Then, based on my overall learning experience in 8 sections of the FEPD and learning
experience in the FEID, I prepared this internship report. There are various stakeholders in
foreign trading activities. These include Exporters, Importers, C&F Agents, Bangladesh Bank,
Authorised Dealer Banks (AD banks), Customs Authority, Export Promotion Bureau (EPB),
Ministry of Commerce & so forth. There are some rules, regulations, and guidelines as well
such as Foreign Exchange Regulations Act 1947 (FERA), Guidelines for foreign exchange
transaction-2018 (GFET) (Volume 1 & 2), UCP DC- 600 and so forth. Bangladesh Bank has
the sole authority to monitor, control and direct the activities of foreign trade by applying
various policies to its various stakeholders through various sections of FEPD. FEPD applies
guidelines to monitor the market of foreign exchange on behalf of Bangladesh Bank.

FEID is mainly divided into two department. The project division of this department works
Foreign Direct Investment Promotion Project (FDIPP), Two Step Loan (TSL). This division
mainly operates activities regarding funded by JICA, provides loan approval to PFIs and
NBFIs. The main division of FEID works with reporting of inward remittance from capital
account in nature.

Economic development is measured by some key indicators developed by the World Bank.
GDP, GNP, GNI are such indicators to indicate economic development for a country. Foreign
exchange transaction is related to this indicators as the key elements in a foreign transactions.
Total import, total export, FDI, exchange rate, total amount of consumer spending by
Bangladesh in a timeframe directly influenced those economic development indicators to
determine the conditions of economy of Bangladesh.

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 List of Figures

Figure 1: Major Import Partners of Bangladesh (2022) ..................................... 30

Figure 2: Import Trend Analysis (2002-2022) ................................................... 31

Figure 3: Export Trend Analysis (2002-2022) ................................................... 32

Figure 4: Consumer Spending (2002-2022) ....................................................... 33

Figure 5: Foreign Direct Investment (2002-2022).............................................. 34

Figure 6: Exchange Rates of Bangladesh (2003-2022) ...................................... 35

List of Tables

Table 6.1: Descriptive Statistics ......................................................................... 36

Table 6.2: Correlation Matrix ............................................................................. 37

Table 6.3: Result of Multiple Linear regression ................................................. 38

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Table of Contents
Letter of Transmittal ............................................................................................................................... ii

Certificate of Supervisor ........................................................................................................................ iii

Student’s Declaration ............................................................................................................................. iv

Acknowledgement .................................................................................................................................. v

List of Acronyms ................................................................................................................................... vi

Executive Summary .............................................................................................................................. vii

List of Figures ...................................................................................................................................... viii

List of Tables ....................................................................................................................................... viii

Chapter 1: Introduction ....................................................................................................................... 1

1.1 Prelude ....................................................................................................................................... 1

1.2 Background of the Study............................................................................................................ 2

1.3 Objectives of the Report ............................................................................................................ 3

1.4 Methodology .............................................................................................................................. 3

1.5 Literature Review....................................................................................................................... 4

1.6 Scope of the Study ..................................................................................................................... 7

1.7 Limitations of the Report ........................................................................................................... 7

Chapter 2: Overview of Bangladesh Bank ......................................................................................... 8

2.1 Historical Background ............................................................................................................... 8

2.2 Vision and Mission of Bangladesh Bank ................................................................................... 8

2.2.1 Vision ................................................................................................................................... 8

2.2.2 Mission................................................................................................................................. 8

2.3 Head of the Bangladesh Bank .................................................................................................... 9

2.4 Branches of Bangladesh Bank ................................................................................................... 9

2.5 Role of Bangladesh Bank in Developing Economy ................................................................... 9

2.6 Banking Sector of Bangladesh ................................................................................................. 10

2.6.1 Commercial Banks ............................................................................................................. 10

2.6.2 Role of Commercial Banks in Economic Development of Bangladesh ............................ 11

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 2.7 Core Policies of Central Bank .................................................................................................. 12

2.7.1 Monetary policy ................................................................................................................. 12

2.7.2 Reserve Management Strategy........................................................................................... 13

2.7.3 Interest Rate Policy ............................................................................................................ 13

2.7.4 Deposit Insurance ............................................................................................................... 13

2.8 Comparison of Foreign Exchange Policy with other Central Bank ......................................... 14

2.8.1 Efficiency Assessment ....................................................................................................... 14

Chapter 3: Introduction and Functions of Foreign Exchange Policy Department ....................... 15

3.1 Definition of Foreign Exchange ............................................................................................... 15

3.2 Guidelines for Foreign Exchange Policy Department ............................................................. 15

3.3 Function of Sections of the Foreign Exchange Policy Department ......................................... 16

3.3.1 General Section, FEPD ...................................................................................................... 16

3.3.2 Foreign Exchange Market and Large Import Monitoring Section (FEM-LIM) ................ 16

3.3.3 Import Policy Section......................................................................................................... 17

3.3.4 Export Policy Section......................................................................................................... 18

3.3.5 Accounts and Non-Funded Business Policy Section ......................................................... 18

3.3.6 Remittance Policy Section ................................................................................................. 18

3.3.7 External Credit and Grants section .................................................................................... 19

3.3.8 Licensing Section ............................................................................................................... 19

Chapter 4: Learnings from the Internship Program ....................................................................... 20

4.1 Overview of My Internship Program ....................................................................................... 20

4.2 Influence of Internship Program in My Career Development.................................................. 25

Chapter 5: Historical Data Analysis of Variables ............................................................................ 27

5.1 Variables Introduction.............................................................................................................. 27

5.2 GDP of Bangladesh.................................................................................................................. 27

5.3 GNI of Bangladesh .................................................................................................................. 28

5.4 Trend Analysis of GDP and GNI ............................................................................................. 29

5.5 Overview of Import of Bangladesh .......................................................................................... 29

5.5.1 Major Import Partner of Bangladesh ................................................................................. 30

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 5.5.2 Import Trend Analysis ....................................................................................................... 30

5.6 Overview of Export of Bangladesh .......................................................................................... 31

5.6.1 Export Trend Analysis ....................................................................................................... 32

5.7 Overview of Consumer Spending ............................................................................................ 32

5.7.1 Trend Analysis of Consumer Spending ............................................................................. 33

5.8 FDI of Bangladesh ................................................................................................................... 33

5.8.1 Historical Data of FDI........................................................................................................ 34

5.9 Recent Conditions of Exchange Rates ..................................................................................... 34

5.9.1 Fluctuations of Exchange Rates ......................................................................................... 35

Chapter 6: Data Analysis ................................................................................................................... 36

6.1 Descriptive Statistics ................................................................................................................ 36

6.2 Correlation Matrix ................................................................................................................... 37

6.3 Multiple Linear Regression...................................................................................................... 37

Chapter 7: Findings, Recommendations, and Conclusions ............................................................. 39

7.1 Findings.................................................................................................................................... 39

7.2 Recommendation ..................................................................................................................... 39

7.3 Conclusion ............................................................................................................................... 40

Appendix ............................................................................................................................................... 41

References ............................................................................................................................................. 43

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 Chapter 1: Introduction
1.1 Prelude
Imports and exports may seem like prosaic terms that have little bearing on everyday life, but
they exert a profound influence on the consumer and the economy. In today's interlinked global
economy, consumers are used to seeing products and produce from every corner of the world
in their local malls and stores. These overseas products - or imports - provide more choices to
consumers and help them manage strained household budgets (Sohive, 2022). But too many
imports in relationship to exports -which are products shipped from a country to foreign
destinations can distort a nation's balance of trade and devalue its currency. The value of a
currency, in turn, is one of the biggest determinants of a nation's economic performance. On
the other hand, besides monetary gains, remittances are associated with greater human
development outcomes across several areas such as health, education, and gender equality.
There are also positive spillover effects, with some of the expenditures and investments made
by remittance-receiving households accruing to entire communities. Remittances are the most
tangible and least controversial link between migration and development (Ibrahim, 2023). In
this brief, much more can be done by policymakers to maximize the positive impact of
remittances by making them less costly and more productive for both the individual and the
country of origin. So, the effect of the export, import, and remittances is found on the GDP,
GNP, and inflation rate, balance of payment, interest rate, and exchange rate. The country's
economy is hugely influenced by exports, imports, and remittances where in this section, there
needs a standard and strong regulation. On the other hand, economic development of a country
is measured by its Gross Domestic Product (GDP), Gross National Income (GNI), spending on
healthcare, literacy rate and many more indicators by the World Bank.

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1.2 Background of the Study
The internship project is the fulfillment of an active part of the internship program as per the
requirements for completing the BBA program. As an intern attached to the Bangladesh Bank,
naturally, the selected project will be related to the area by which the organization can be
influenced. Bangladesh Bank is the central bank of the country. It is a significant part of the
banking sector of Bangladesh, which is always playing an important role in improving the
banking system in this country. To know the different banking functions processes and other
activities which are related to the banking system, Bangladesh Bank is the best because of its
vast and sound financial systems. Bangladesh Bank is the sole authority of Foreign Exchange
in Bangladesh. Authorized Dealers (Ads) and Money Changers directly represent Bangladesh
Bank in the Foreign Exchange market.

There are 854 ADs & and 370 MCs in Bangladesh. Ads and MCs follow the Guidelines for
Foreign Exchange Transaction-2018, Volume 1&2. Bangladesh Bank Monitor ADs & MCs in
the light of Foreign Exchange Regulation Act-1947 (Foreign Exchange Transaction Guideline,
n.d.). Bangladesh Bank also monitors other regulations like the Import & Export Control Act-
1950 through IPO, Importers, Exporters & Indenters Registration Order-1981, Customs Act-
1969 (1st Schedule-HS Code), PSI Act-1999 (NBR designated). Moreover, Import Terms 2021
consisting of uses of FOB, FAS, CFR, CIF, ExWork, and DAP are also applied by Bangladesh
Bank in foreign exchange transactions (Foreign Exchange Transaction Guideline, n.d.).
Besides that, international practices of ICC publications such as UCPDC-600, ISBP, ISP-98,
URC, and URR are also monitored by the Bangladesh Bank (Bangladesh Bank, 2019).

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1.3 Objectives of the Report
General Objective(s):
The general objective of the report is to represent the Foreign Exchange Policy Department of
Bangladesh Bank and to have a clear conception about all of the sections of the Foreign
Exchange Policy Department (FEPD) including its functional, operational, and financial
aspects.

Specific Objective(s):

i. To introduce all of the functions of the Foreign Exchange Policy Department and find
out the activities and implication of effective foreign exchange policies to stabilize
foreign exchange market in Bangladesh.
ii. To acquire a practical knowledge and personal observation about the overall Foreign
Exchange Policy procedure, functions, principles and its nature.
iii. To conduct a comprehensive analysis to assess the influence of Foreign Exchange
Policy on economic development.

1.4 Methodology
To make the report presentable and meaningful two sources of data and information have been
used to complete the report primary and secondary sources.

Primary Sources:
 Face to face conversations with bank officers of different sections of Foreign Exchange
Policy Department of Bangladesh Bank.
 Practical work experience.
 Personal Diary.

Secondary data:

 Stata has been used in conducting regression.

 Materials provided by Bank Officers of Foreign Exchange Policy Department of
Bangladesh Bank (Head Office)
 Guidelines related to Foreign Exchange Transactions of Bangladesh Bank
 Bangladesh Bank Annual Reports
 Bangladesh Bank Library, Published Documents, Circulars, Publications, Website.

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1.5 Literature Review
The enduring importance of robust local economies in fostering economic wealth, equality, and
an elevated quality of life, with Schumacher (1974) as a key proponent. It highlights the proven
benefits of such economies, including heightened multipliers in the overall economic
landscape, as elucidated by Jacobs (1970), attributed to increased forward and backward
economic linkages to new and existing industries, respectively, a concept expounded by
Krugman (1997). The concentration of innovative activities in local economies, as highlighted
by Schumacher (1974), sparks disruptions in the regional economy, leading to increased job
growth. This concentration also contributes to higher wages and decreased income inequality,
according to Schumacher (1974) and Matarrita-Cascante (2010). Overall economic wealth rises
due to improved production efficiency achieved through economies of scale and reduced input
costs. Community empowerment to shape their economy, resisting globalization pressures, as
discussed by Engen and Skinner (1996) and Krugman (1998), is a crucial factor.

The concept of foreign trade theory, originating in the 16th century, views trade as a catalyst
for growth. Nigeria has significantly gained from international trade, expanding its range of
consumable goods and accessing resources for swift development. Aboyade (1983) emphasizes
that trade has fostered both global and domestic equality, boosting actual incomes and making
efficient use of resources. Nevertheless, developing nations, such as Nigeria, encounter
challenges due to the protective measures implemented by developed countries, impeding
specialization and affecting export earnings. Obadan (1996) points out issues like tariff
escalation and non-tariff barriers contributing to the export pessimism hypothesis, questioning
the growth potential of newly industrialized countries. Despite of newly industrialized
countries.

Despite economists advocating for free trade as a growth stimulant, it may not be advantageous
for developing countries undergoing rapid structural changes, particularly with products like
agricultural goods characterized by low elasticity. The doctrine of comparative advantage,
linked to free trade, may result in over-specialization on a limited range of products, making
the economy vulnerable to foreign influences and potentially detrimental to development.
Before 1960, Nigeria's export trade was dominated by non-oil products such as groundnut,
palm produce, cocoa, rubber, and cotton, accounting for about 66 percent of total exports.
However, since the mid-1970s, crude oil has become the primary foreign exchange earner,
causing a shift from the non-oil sector. In 1986, a crisis highlighted the drawbacks of the

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previous policy of import substitution industrialization, which protected import-competing
manufacturing activities but led to overreliance on oil exports.

The core principle of import substitution, introduced by Shefer (1973) and further developed
by Shuman and Hoffer (2007), is presented as a means to create enhanced local economic
scenarios that positively impact the overall economy. Shuman's (2007) definition of import
substitution involves replacing economic goods and services produced elsewhere with locally
sourced alternatives. This approach, as argued by the authors, fortifies local economic
resilience against shocks from a singular export-oriented globalized economy. The text also
draws on the perspectives of Wilson (2012), Sassen (2001), and Hopkins (2011) to reinforce
the idea that increased import substitution contributes to this resilience. increased resilience,
facilitated by import substitution (Phillips et al., 2013), leads to stronger sustainability across
economic, social, and ecological dimensions. This, in turn, enhances the quality of life,
supported by references to Schumacher (1974), Jacobs (1970), and Emery and Flora (2006).
Agglomerative effects within a robust local economy, influenced by variables discussed by
Krugman (1998), Roos (2005), and Porter (2000), result in improved economies of scale,
reduced industry costs, and multifaceted enhancements in economic, social, and quality of life
aspects for the community.

Elibariki (2007) underscores that, according to neoclassical theory (NT), Foreign Direct
Investment (FDI) stimulates income growth by increasing capital per person, fostering
enduring growth through activities like research and development (R&D), and enhancing
human capital. Multinational Corporations (MNCs) expedite the development of new products,
quality improvement, and global collaboration on R&D through technological transfer and
spillovers. On the other hand, classical economic theory, as outlined by Abate (2021), asserts
that foreign investment is entirely beneficial to the host economy. This theory suggests that
FDI, by introducing capital, propels economic development in the host country. Nevertheless,
critics argue that this capital infusion might overshadow local capabilities, channeling profits
to foreign investors and leaving the host country with inadequate capital for its own investment.
This challenges the notion that FDI exclusively favors the host country (Abate, 2022).

According to Abate (2022), classical economic theorists argue that Foreign Direct Investment
(FDI) contributes to economic growth by facilitating technological transfer, bringing
knowledge and skills not initially available in the host country. The theory suggests that the
host country benefits through widespread diffusion of technology, as local workers learn to
operate and apply acquired skills in various areas within the host nation. Abate further contends

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that the classical theory emphasizes FDI's role in creating new employment opportunities,
addressing high unemployment rates, and combating poverty. However, in developing
countries, FDI seeking cheap labor and resource extraction can negatively impact development,
prompting the study to examine the compensation structure for employees, considering
concerns raised by researchers like Abate (2020) about low wages and insufficient payment for
services rendered. Empirical evidence on the impact of agricultural Foreign Direct Investment
(FDI) at the global, continental, and regional levels. According to IMF (2003), FDI inflows
and outflows were dominated by European Industrial Countries in 2000, with FDI inflow into
developing countries growing at an average of 23% annually from 1990 to 2000. The decline
in government expenditure and aid to agriculture underscores the need for focused attention on
the sector's development to address poverty and unemployment in rural communities. In
Nigeria, agriculture has historically been a cornerstone, contributing significantly to GDP, job
creation, and food self-sufficiency (Oloyede, 2014).

The debate on the relationship between Foreign Direct Investment (FDI) and economic growth
has seen mixed empirical findings. Lamsiraroj (2016) and Raza and Jawaid (2014) employed
different methods and data sets, confirming a positive connection. In China, studies often
focused on specific regions, such as the Pearl River Delta and Yangtze River Delta, with Tuan
et al. (2009) finding FDI positively impacting GDP growth. Ouyang and Fu (2012) highlighted
positive spillovers from FDI in cities to inland cities, while Whalley and Xin (2010) suggested
a significant contribution of FDI to China's economic growth. Xu (2010) analyzed provincial
data from 1987 to 2008, concluding that FDI had a positive and statistically significant effect
on growth.

The effective management of exchange rates is crucial for economic development. Rodrik
(2008) argues that institutional and market failures adversely affect tradable activities in
developing countries, emphasizing the importance of real devaluation to boost productivity in
those sectors. Rapetti et al. (2012) highlight the positive impact of currency undervaluation on
growth in developing countries, with findings sensitive to sample division criteria. However,
the correlation between undervaluation and per capita GDP is more pronounced in the least
developed and wealthiest nations. Studies on China's exchange rate policy yield mixed results,
with Chen (2012) supporting a positive impact on economic development, while Tang (2015)
finds no direct link using a cointegrated VAR model. Exploring the broader context, Fraj et al.
(2018) conclude that exchange rate flexibility may destabilize emerging markets but fosters

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growth in developed countries. Additionally, Habib et al. (2018) suggest that exchange rate
appreciation might reduce growth in developing countries while stimulating it elsewhere.

1.6 Scope of the Study

The study focuses on functions of Foreign Exchange Policy Department of Bangladesh Bank
and shows impact of import, export, exchange rate in different economic development
indicators of Bangladesh. It also addresses how the economy of Bangladesh is benefited by
Foreign Exchange Policy Department. I mainly tried to focus the economic expansion and
economic development is accelerated by the policy taken by Bangladesh Bank. The report
covers its overall department wise function, structure and performance of Foreign Exchange
Policy Department.

1.7 Limitations of the Report

 Short Period of Time: An internship program with a duration of a short-time
period posed a significant challenge to writing this report. The internship's short
period made it impossible to fully comprehend such a wide-ranging field as
sustainable financing.

 Data Accuracy: Frequent changes in some numerical values of data may affect the
accuracy of the data used in the report.

 Scope Limitations: The report might focus on a specific aspect of the topic,
neglecting other potentially relevant factors or perspectives.

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 Chapter 2: Overview of Bangladesh Bank
2.1 Historical Background
Bangladesh Bank, the central bank of Bangladesh was established as the central "Bank under
the Bangladesh Bank (Temporary) Order, 1971. It took place of State Bank of Pakistan for the
territory of Bangladesh in the wake of liberation of the country. The office of the Deputy
Governor of State Bank of Pakistan in Dhaka operates as its Head Office. The order was passed
by the Acting President on the 25th December, 1971 and published in the notification No. 583-
pub, dated the 26th December, 1971 of the Ministry of Law and Parliamentary Affairs, with
effect from the 16th day of December, 1971. The order provided for continuance as legal tender
of all bank notes issued by the State Rank of Pakistan and all coins of the Government of
Pakistan that were in circulation in Bangladesh on the 16th December, 1971. The Order was
repealed, later on, by " The Bangladesh Bank Order, 1972" (President's Order No. 127 of 1972)
as published in Bangladesh Gazette, Extraordinary, part-III A dated the 31st October. 1972 by
the Ministry of Law and Parliamentary Affairs (Law Division) vide notification No. 935 - pub,
dated the 31st October, 1972. It is the statutory authority to regulate, control, and facilitate
economic activities through proper formulation of Monetary Policy.

2.2 Vision and Mission of Bangladesh Bank

2.2.1 Vision
To develop continually as a forward-looking central bank with competent and committed
professionals of high ethical standards, conducting monetary management and financial sector
supervision to maintain price stability and financial system robustness, supporting rapid broad
based inclusive economic growth, employment generation and poverty eradication in
Bangladesh

2.2.2 Mission
Bangladesh Bank is carrying out its following main functions as the country's central bank:

 Formulating Monetary and Credit Policies;

 Managing Currency Issue and Regulating Payment System;
 Managing Foreign Exchange Reserves and Regulating the Foreign Exchange Market;

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  Regulating and Supervising Banks and Financial Institutions, and Advising the
Government on Interactions and Impacts of Fiscal, Monetary, and Other Economic
Policies.

Bangladesh Bank is serving these functions in a forward-looking, proactive, responsive, and

consultative manner. In aspiration for ever higher standards of performance, Bangladesh Bank
is working with their limitations in independence, logistics, professional know-how, and
appropriateness of skill sets in staffing; and working persistently to overcome these limitations.
All of the employees of the bank are working to strengthen the already-earned confidence and
trust of the nation, to continue being seen as a respected institution to be emulated.

2.3 Head of the Bangladesh Bank

The head of the Bangladesh Bank is the Governor. The present Governor of Bangladesh Bank
is Mr. Abdur Rouf Talukder who took the control of the Central Bank of Bangladesh for four
year tenure on July 12, 2022 as the 12th Governor of Bangladesh Bank, the country's monetary
policy authority, financial sector regulator and supervisor. His seat is at the head office of
Bangladesh Bank at Motijheel, Dhaka. The Governor chairs the Board of Director. The
Governor works as the chairman of the central bank of Bangladesh. He is a member of the
board of directors consist of the governor of the bank and eight other members.

2.4 Branches of Bangladesh Bank

At present the Bangladesh Bank has 10 branches located around the country. They are:
Motijheel Office Rajshahi Office
Sadarghat Office Rangpur Office
Barishal Office Sylhet Office
Bogra Office Khulna Office
Chittagong Office Mymenshing Office

2.5 Role of Bangladesh Bank in Developing Economy

In developing economies, in fact, the development aspect of the central bank functions is of
greater importance than its regulatory aspect. The contribution it can make to the regulation,
direction and guidance of such credit institutions as exist at the time must be of secondary and
lesser consideration.

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The objectives of Bangladesh Bank’s policy in a developing economy are stated as follows:
1. To assist in the mobilization of savings in the community and promote capital formation;
2. To promote the spread of monetization and monetary integration through the
development of an integrated commercial banking system.
3. To make adequate provision of credit necessary for fulfillment of the targets of
production and trade.
4. To extend monetary support to the authorities in the central task of allocation of resources
among different sectors in the economy.
5. To help in maintaining general price stability and preventing inflationary tendencies from
getting out of hand.
Thus, to develop economy, Bangladesh bank actively participates in the growth process and
creates favorable conditions for fostering growth with stability.

2.6 Banking Sector of Bangladesh

2.6.1 Commercial Banks
A commercial bank is a type of financial intermediary and a type of bank. It raises funds by
collecting deposits [typically small] from businesses and consumers via checkable deposits,
savings deposits, and time deposits then makes loans to businesses and consumers on the basis
of determined interest rates. It also buys corporate bonds and government bonds. Its primary
liabilities are deposits and primary assets are loans and bonds. Main objective of the
commercial banks are to earn profit through services.

Functions of Commercial Banks:

As commercial banks are financial institutions, they are engaged in a lot of activities for
facilitating the ever-growing trade and commerce of the country. Besides they have to provide
useful services to the customers in operations of trade and commerce to help the economic
development. They are participating in economic development by performing their mandated
functions to Bangladeshi people. Their functions are categorized below -

1. General Functions / Services:

 Receiving deposits through Current-Savings-Fixed accounts
 Granting loans utilizing the deposits
 Creating loan deposits by providing loans
 Bill discounting
 Creating Medium of Exchange

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  Money Transfer
 Submission of financial statement to Central Bank

2. Developmental Functions/Services:
 Formation of capital
 Helps Central Bank and govt. in credit control
 Grant loans to developing and promising sectors for development
 Investment in growing opportunity businesses
 Creating employment

3. Agency Functions/Services:
 Collect payments on behalf of the customer
 Acts as an underwriter
 Agency in trade and commerce
 Maintaining the secrecy of the clients

4. Other Functions/Services:
 Motivates people to save more thus the fund can be invested for GDP growth
 Provide services for preserving valuable assets
 Counseling
 Issue of solvency certificate
 Publication of financial statements for public clarification
 Issue of credit instruments
 Help in developing standard of living

The above-mentioned functions clearly stated the role commercial banks could play in
economic development of a country.

2.6.2 Role of Commercial Banks in Economic Development of Bangladesh

As financial intermediaries, commercial banks perform six broad functions to generate
economic growth for the whole nation -

i. Conducting exchange (clearing and settling claims throughout nation and also offshore
dealings)

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 ii. Funding large-scale enterprises (pooling resources) and Small & Medium Size
Enterprises (creating opportunities)

iii. Transferring purchasing power across time and distance by mobilizing funds through
their branch operations

iv. Providing risk management (hedging, diversification, and insurance)

v. Monitoring borrower performance (mitigating adverse incentives), and

vi. Providing information about and managing the relative supply and demand for credit
throughout the nation.

vii. Representing the nation to the world trade and commerce through export import
operations.

viii. Financing thrust sectors (Agriculture, Industrialization, IT, RMG, Livestock, Housing)
for contributing to the overall GDP.

ix. Helping in regional development through bilateral agreements with neighboring

countries.

x. Helping in Employment generation through branch expansion while contributing to the

increase the standard of living.

2.7 Core Policies of Central Bank

2.7.1 Monetary policy
The main objectives of the monetary policy of Bangladesh Bank are:

 Price stability both internal and external

 Sustainable growth and development
 High employment
 Economic and efficient use of resources
 Stability of financial and payment system

Bangladesh Bank declares the monetary policy by issuing a Monetary Policy Statement (MPS)
twice (January and July) in a year. The tools and instruments for implementation of monetary
policy in Bangladesh are Bank Rate, Open Market Operations (OMO), Repurchase agreements
(Repo) and Reverse repo, and Statutory Reserve Requirements (SLR & CRR).

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2.7.2 Reserve Management Strategy
Bangladesh Bank maintains the foreign exchange reserve of the country in different currencies
to minimize the risk emerging from widespread fluctuation in the exchange rate of major
currencies and very irregular movement in interest rates in the global money market. BB has
established NOSTRO account arrangements with different Central Banks. Funds accumulated
in these accounts are invested in Treasury bills, repos and other government papers in the
respective currencies. It also invests in the form of short-term deposits with different high-rated
and reputed commercial banks and purchases of high-rated sovereign/supranational/corporate
bonds. A separate department of BB performs the operational functions regarding investment
which is guided by investment policy set by the BB's Investment Committee headed by a
Deputy Governor.

2.7.3 Interest Rate Policy

Under the Financial sector reform program, a flexible interest policy was formulated.
According to that, banks are free to charge/fix their deposit (Bank/Financial Institutes) and
Lending (Bank /Financial Institutes) rates other than Export Credit. At present, except Pre-
shipment export credit and agricultural lending, there is no interest rate cap on lending for
hanks. Yet, banks can differentiate interest rate up to 3% considering comparative risk elements
involved among borrowers in same lending category. With progressive deregulation of interest
rates, banks have been advised to announce the mid-rate of the limit (if any) for different sectors
and the banks may change interest 1.5% more or less than the announced mid- rate on the basis
of the comparative credit risk. Banks upload their deposit and lending interest rate in their
respective website.

2.7.4 Deposit Insurance

The deposit insurance scheme (DIS) was introduced in Bangladesh in August 1984 to act as a
safety net for the depositors. All the scheduled banks Bangladesh are the member of this
scheme Bank Deposit Insurance Act 2000. The purpose of DIS is to help to increase market
discipline, reduce moral hazard in the financial sector and provide safety nets at the minimum
cost to the public in the event of bank failure. A Deposit Insurance Trust Fund (DITF) has also
been created for providing limited protection (not exceeding Taka 0.01 million) to a small
depositor in case of winding up of any bank. The Board of Directors of BB is the Trustee Board
for the DITF. BB has adopted a system of risk based deposit insurance premium rates
applicable for all scheduled banks effective from January June 2007. According to new

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instruction regarding premium rates, problem banks are required to pay 0.09 percent and
private banks other than the problem banks and state owned commercial banks are required to
pay 0.07 percent where the percent coverage of the deposits is taka one hundred thousand per
depositor per bank. With this end in view, BB has already advised the banks for bringing DIS
into the notice of the public through displaying the same in their display board.

2.8 Comparison of Foreign Exchange Policy with other Central

Bank
 Bangladesh Bank:

The central bank of Bangladesh generally follows a managed float exchange rate system, where
the central bank intervenes in the foreign exchange market to stabilize the currency. BB focuses
on maintaining a stable exchange rate to promote export competitiveness and attract foreign
investment. BB has to face limited flexibility due to lower foreign exchange reserves compared
to other central banks.

 Reserve Bank of India:

The Reserve Bank of India adopts a managed floating exchange rate regime, where the central
bank intervenes in the market to manage excessive volatility. RBI have implemented various
measures to promote exports. Such as, providing huge amount as export subsidies and
promoting special export zones. They have more flexible exchange rate adjustments to reflect
the market conditions in comparison of the central bank of Bangladesh, Bangladesh Bank.

 The Federal Reserve:

The Federal Reserve is the central bank of USA which operates under a free-floating exchange
rate regime, where the value of the currency is determined by market forces. They focus on
maintaining a flexible exchange rate to absorb external shocks and ensure macroeconomic
stability.

2.8.1 Efficiency Assessment

The efficiency of a foreign exchange policy depends on various factors, including economic
stability, trade policies, and monetary policy effectiveness and resilience to external shocks.

The Federal Reserve's free-floating exchange rate system is generally considered efficient due
to its flexibility and ability to adjust to market conditions.

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 Chapter 3: Introduction and Functions of Foreign
Exchange Policy Department

3.1 Definition of Foreign Exchange

Foreign Exchange defined in terms of section 2(d) of the FERA - 1947 as adapted in
Bangladesh, Foreign Exchange means any instrument drawn, accepted, made or issued under
clause (13) of Article 16 of the Bangladesh Bank Order, 1972, foreign currency and includes
all deposits, credits and balances payable in foreign currency as well as foreign currency
instruments such as draft, travelers cheque, bills of exchange, promissory notes, letter of credits
expressed or drawn in Bangladesh currency but payable in foreign currency.

3.2 Guidelines for Foreign Exchange Policy Department

The Foreign Exchange Policy Department follows some rules and regulations to perform its
duties. Bangladesh Bank has some acts and guidelines to maintain this department. These are:

 Foreign Exchange Regulation Act. of Bangladesh:

Foreign Exchange Regulation (FER) Act, 1947 (Act No. VII of 1947, amended upto September
09, 2015) enacted on March 11, 1947 in the then British India Provides the legal basis for
regulating certain payments, dealings in foreign exchange and securities and the import and
export of currency and bullion. This Act was first adapted in Pakistan and then in Bangladesh.
Bangladesh Bank and more specifically FEPD is responsible for the administration of
regulations under the Act. Basic regulations under the FER Act 1947 are issued by the
Government as well as by Bangladesh Bank in the form of Notifications which are published
in the Bangladesh Gazette. Directions having general application are issued by Bangladesh
Bank in the form of notifications, FE circulars, SPA circulars and circular letters. Ads in foreign
exchange are required to bring the foreign exchange regulations to the notice of their customers
and should report to Bangladesh Bank about any direct or indirect, evasion of the provisions
of the Act, or any rules, orders or directions issued thereunder.

 Guidelines for Foreign Exchange Transactions (Vol. 1&2)

'Guidelines for Foreign Exchange Transactions' consists of two volumes. This is a collection
of the instructions to be followed by the Authorized Dealers and their constituents, Money
Changers in transactions relating to foreign exchange. The first volume includes the
instructions and the prescribed forms/declarations relating to individual transactions. The

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second volume delineates the procedure of reporting of foreign exchange transactions by
Authorized Dealers to Bangladesh Bank, and includes the proformas for monthly returns,
statements, and schedules for such reporting. Both volumes include instructions as of
November 30, 2017, issued to Authorized Dealers and Money Changers in Foreign Exchange.

3.3 Function of Sections of the Foreign Exchange Policy

Department
FEPD has 8 different sections and all of those sections are assigned with different
responsibilities regarding foreign transactions. These sections are:

3.3.1 General Section, FEPD

This is one of the important section in FEPD. The main functions of this section are:

 To arrange all type of IT instruments. Such as Computer & photocopy machine etc.

 Providing AD licenses to the commercial banks and permitting money changers to do

business.

 Submission of monthly statement about foreign exchange reserve, L/C opening and
settlement, export performance and inward remittance to Ministry of Finance.

 Compliance of Audit Report.

 Preparation of list of weekly outstanding cases as per service standard.

 Sending information to IT Dept. for publication in BB website.

 Providing half-yearly report Secretary Department.

 Weekly outstanding cases put up to GM etc.

3.3.2 Foreign Exchange Market and Large Import Monitoring Section

(FEM-LIM)
Foreign Exchange Market and Large Import Monitoring section are shortly known as FEM-
LIM Section of FEPD. This section is important due to monitor overall import in Bangladesh
as per principles exposed by Bangladesh Bank. The main functions of this section are:

 They monitor import LC for selected items.

 This section monitor or verify price of mentioned items in LC for controlling over or
under balancing of LC.

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  The commercial banks have to notify this section of FEPD before 24 hours in the
settlement of LC with price higher than 3 million USD.
 This section Controls and monitors the procedure of back to back LC by commercial
banks
 This section monitor Net Open Position (NOP) of the commercial banks by limiting the
amount of foreign currency reserve that they can hold in a working day.
 Any person can take USD 10,000 to go abroad for medical purpose without prior
approval of Bangladesh Bank. But if they want to take more amount than that they need
to take prior approval from Bangladesh Bank. This section will provide that approval
on behalf of Bangladesh Bank.

3.3.3 Import Policy Section

Import of goods into Bangladesh is regulated by the Ministry of Commerce in terms of the
Import and Export (Control) Act, 1950; with Import Policy Orders issued biannually, and
Public Notices issued from time to time by the office of the Chief Controller of Imports and
Exports (CCI&E). The instructions contained in this chapter apply to sales of foreign exchange
or transfers to non-resident taka accounts against import of goods into Bangladesh. Different
types of functions of the section are mentioned below:

 To give decision on issues raised by banks in connection with Foreign Exchange

Transactions on Import.
 To give approval of Advance Payment.
 To provide approval relating to Off-shore Banking
 To give approval of deferred payment L/C and Back-to-Back L/C against deferred
payment L/C.
 To give approval of import of service and payment of service charges.
 To monitor Non-payment of Import Bills.
 To take necessary actions against various complaints related to import etc.
 To monitor deferred payment L/C and Back-to-Back L/C against deferred payment
L/C.
 To give approval/opinion related to the Enterprises of EPZ
 To issue NOC for selling of amendment of IGM (Import General Manifest) or for
getting supplementary IGM
 To give Issuance of NOC for selling of goods locally which are imported for trade fair.

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3.3.4 Export Policy Section
Exports: Govt. Notifications No. 1(6)-ECS/48 and 1(7)-ECS/48 dated the 1st July, 1948 issued
pursuant to Section 12 of the FER Act prohibit export of any goods directly or indirectly to any
place outside Bangladesh, unless a declaration is furnished by the exporter to the Collector of
Customs or to such other person as the Bangladesh Bank may specify in this behalf that foreign
exchange representing full export value of the goods has been or will be disposed of in a manner
and within a period specified by the Bangladesh Bank.

Different types of functions of the section are mentioned below:

 To disseminate decision on the issues raised by banks / Exporters / Association in

connection with Policy Guidelines of disbursement of Cash Incentive / Export Subsidy.
 To give decision on issues raised by banks in connection with Foreign Exchange
Transactions on exports.
 To pass comments on issues relating to bilateral trade asked by Ministry of Commerce,
Bangladesh Tariff Commission, EPB.
 To review minutes of meetings held in different bodies of the Government and take
necessary action.
 To accord permission for appointment of foreign agent to work in favor of for
Bangladeshi Exporters.
 To take necessary action on complaints lodged by exporters etc.

3.3.5 Accounts and Non-Funded Business Policy Section

 Approval, renewal, and disposal of the bank guarantee.
 This section deals with various types of foreign currency accounts.
 Give permission for opening transaction in FC Accounts and give maintaining
approval, cancellation and correspondence of related cases.
 Give permission for release of (1) Excess amount foreign currency over the prescribed
limit and (2) Dispute related to foreign currency from involved guarantee.

3.3.6 Remittance Policy Section

The main functions of this section are:

 This section monitors remittances of both private and public sector.

 This section performs according to the regulations mentioned in Chapter 10, 11, 12 of
GFET.

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  They controls both inward and outward remittances for controlling money laundering.
In private sector, software fees, IT Importers fees, Consultation fees are mainly part of
private inward remittance. This section controls and checks these service because they
do not have any physical existence.

3.3.7 External Credit and Grants section

This section mainly deals with how does an organization takes loan from international bodies
to finance their working capital which is short term in nature. Before granting a loan, they
perform financial statement analysis which includes estimating ROA, ROE, Cash flow from
operating activities and so on to determine whether decision of taking loan will be a good
decision or not. Besides, many industrial companies get grants from Foreign Organizations and
Government of Bangladesh need opinion from this section before making a contract with
foreign body to take any long term loan.

3.3.8 Licensing Section

 Issuance of AD License, Limited AD License for bank branches, Limited Money
Changer License for different Hostels/institutions.
 Giving permission to bank to establish drawing arrangement with exchange (abroad) to
facilitate inward wage earners remittances.
 Issuance and cancellation of Money Changer License and related activities.
 Supervision/Disposal of complaint against Money Changers.
 Giving permission of change of office premises of money changers, change of
ownership structure, Change of AD banks etc.

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 Chapter 4: Learnings from the Internship Program

4.1 Overview of My Internship Program

On December 31, 2023, I received a call from HRD 2 of Bangladesh Bank inviting me to join
as an intern at Bangladesh Bank. They instructed me to report to HRD 2 on January 2, 2024.
So I began my internship journey at Bangladesh Bank on January 2, 2024, embarking on a
rewarding three-month program that spans from January to March.

They gave me a list of the names of department of Bangladesh Bank so I may choose one to
join. I choose the Foreign Exchange Policy Department from that list, and the HR Department
of Bangladesh Bank also allotted me Foreign Exchange Investment Department. I started
working at the Foreign Exchange Policy Department on January 8 as per the schedule policy
by the HR Department of Bangladesh Bank.

Firstly, I joined Foreign Exchange Policy Department as per the rotation policy from HRD-2
where my supervisor was Mohammad Nuryuddin Haider, Joint Director, FEPD, Bangladesh
Bank. I was assigned to Foreign Exchange Market and Large Import Monitoring Section of
FEPD for first 15 days of my internship program.

Foreign Exchange Policy Department of Bangladesh Bank oversees regulations and guidelines
related to foreign exchange transaction. I was assigned to various section of this department to
have practical knowledge about how they monitors or controls foreign exchange transactions.
I have to report at 10 am and have to work till 5 pm under supervision of Mohammad
Nuryuddin Haider, Joint Director, FEPD, Bangladesh Bank. He instructed me to complete
various tasks and I have tried my level best to satisfy him with output of mine.

I have done field work like summarizing of BB AD Circular, sending notices regarding foreign
exchange policy to the ADs on behalf of FEPD, and so on. My supervisor often instructed me
to communicate with various personnel and providing summary to him of that conversation.

My supervisor of FEPD guided me towards various functions of the sections of FEPD and he
assigned some personnel from each section as per the rotation policy to guide me towards the
operational activities, rules and regulations of those section. The workplace environment
consisting of friendly and supportive behavior of every personnel encouraged me to learn new
things. They also encouraged me to provide feedback on their briefing about those sections.

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Firstly, I came to know because of this internship program that the Guidelines for Foreign
Exchange Transaction (GFET) which is known as the Bible for foreign exchange transactions
is formulated by FEPD. It has two volumes which are publicly available on the website of
Bangladesh Bank and Volume 1 is considered the main part of this guideline.

I also learned about some international laws and guidelines regarding foreign exchange
transaction published by International Chamber of Commerce (ICC). I came to know that
UCPDC-600 and ISBP-745 are the two laws which must have to be followed in a foreign
exchange transaction.

This internship program helps me to learn that the general section of FEPD provides
Authorized Dealers licenses to the commercial Banks for performing foreign exchange
transactions and also permits the Money Changers to do their business according to the rules
and regulations mentioned in FER Act 1947 and in GFET. The loans outside the geographical
border of Bangladesh also have to follow the GFET.

Through practical knowledge, I have learnt about these letter of credit (LC), documentary
collection, cash in advance, and open account 4 processes that an importer can use to pay the
amount of import. Importer from Bangladesh do not get the opportunity of payment via open
account because it mainly depends on country image of the importer’s. I have learned about all
those 4 process of payment of import and more specifically about LC.

This internship program made me able to know about the Import Terms 2021, where it is
mentioned about which party of a foreign transaction will bear the cost regarding the whole
procedure. FEPD has mentioned some terms regarding this issue. I also got to know about
ExWork which is mostly used in case of imports are done by any importers from Bangladesh.
It is an international trade term indicating that the seller has fulfilled their obligation once the
goods are made available at their premises. The buyer is responsible for all transportation costs,
risks, and customs clearance from the seller's location to the final destination. It is considered
the most basic and least restrictive of the Incoterms, placing the maximum responsibility on
the buyer.

I have come to know that the FEM-LIM section of FEPD has to deal with LC of the commercial
banks. I gain practical knowledge about the tasks assigned to this section of monitoring over
balancing of LC and Under Balancing of LC. I got to know during this internship program that
LIM section has taken several steps regarding settlement of the price of a LC. Their one of the
main task is to verify the international price of the mentioned products or goods in the LC.

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Some personnel from this section verifies prices of things which usually imported by importers
of Bangladesh. They check the prices by checking some confidential international website and
report those price daily to the Governor of Bangladesh Bank on 4pm. Commercial bank has to
match the mentioned price of the commodities in the LC and the verified price of LIM section
before issuing a LC.

Besides, verification of price by LIM section also deals with providing permission on behalf
of Bangladesh Bank. I got to know that if a LC contains price less than 3 million USD, ADs
can issue them without notifying Bangladesh Bank. If the price is higher than 3 million USD,
ADs have to inform LIM section on behalf of Bangladesh Bank before 24 hours.

During this internship, I got to know about the limit of holding highest amount of foreign
currency by all of the AD branches of a commercial bank in a day. If the holding limit exceeds,
the bank will have to transfer those extra amount to other bank as a loan who has a deficit in
its NOP balance. Otherwise, the extra amount will have to send in the Foreign Reserve and
Treasury Management department of Bangladesh Bank via FEPD.

Moreover, I also got idea regarding NOSTRO Account, NOSTRO reconciliation, and the
sovereign credit ratings of Bangladesh which mainly depends on how well the monetary sector
and fiscal sector of Bangladesh is organized.

My supervisor once asked me if I know the reasons that why importers in Bangladesh want to
open LC in foreign currency. I replied that I did not know then he game the answer that if the
importers open LC in domestic currency or Bangladeshi Taka they will have to bear an extra
cost of 3%. But if they open that LC in foreign currency they will not have to bear that cost of
3% and as well as they will get some extra benefits at the time of settlement of the payment.
For these reasons, importers want to open LC in foreign currency.

Furthermore, he also gave me answer regarding Dollar reserving crisis of Bangladesh. He told
me that bargaining power to the importers from Bangladesh is not available. As being a country
of third world, importers from this country cannot get this opportunity of selecting routes of
shipment, their transit way and etc. Importers are using "Hundi" for transferring money out of
the country. Besides, they are doing over and under balancing of LC. Bangladesh Bank is
working strictly to control this. Besides, the Government of Bangladesh has taken many
projects of development that needs more and more amount of USDollars to spend. Besides, the
government has to pay off many international loans and the rate of Dollar is one of the strongest
reason why Bangladesh is facing difficulties in foreign reserve.

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This internship program helped me to know that the number of a LC contains several things.
They are: LC Number, Date of Issue, Name of the Applicant, Name of the Beneficiary,
Currency Code, Percentage Credit Amount Tolerance, Deferred Payment Details, Description
of the Products, and Transiting Way.

For gaining practical knowledge they have shown me a LC that contains a number of
102622020053.

 1026 is the number of AD Bank.

 22 is the number of the year.
 02 indicates the types of LC.
 0053 is the serial number of the LC.

Furthermore, I also have learned about the regulations that must have to be followed in an
export procedure. Those regulations are:

1. Import-Export Control Act, 1950-

 Import Policy Act
 Export Policy
2. Foreign Exchange Regulation, 1947
3. Guidelines for Foreign Exchange Transaction, 2018 (Vol. 1&2)

I also got to know about papers that are required in export transaction:

Shipping Documents Non-shipment Documents

 Bill of Lading  Proforma Invoice
 Insurance Documents  Charter Party Contract
 Bill of Exchange  Letter of Credit
 Commercial Invoice  Indent Letter
 Certificate of Origin  Dock Paper
 GSP Certificate  Bill of Entry
 EXP Form

I got to know that remittance section 1 of FEPD deals with remittances from public sector and
remittance section 2 deals with remittances from private sector. Remittance section monitors
services to identify inward and outward remittances to prevent money laundering. Besides,

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travel quota is also fixed by this department. A person can take $12,000 yearly for travelling.
Among those he has to take $5,000 cash and remaining amount through card or other media.

Moreover, I got to know the procedures of taking loan from outside the country. Many
multinational company are doing businesses in Bangladesh. If they need any funds, they will
finance those fund from their parent company outside the country. I have learned about those
steps included in taking those loan.

After completing my scheduled days at FEPD, I was assigned to the Foreign Exchange
Investment Department where I got to know that FEID is divided into two sections. One is
Project Section and other one is Main Department. I was assigned to this department on
February 6, 2024. I got to know various activities of both sections of FEID.

Project: The processes of opening this division started back in 2015 but it started its operations
in 2018. Main goal of project are is to finance 4 types of company. They are:

1. Japan Originated Company

2. Japan-Bangladesh Joint Venture Company
3. Japan-Others Country Joint Venture Company
4. Bangladeshi Companies whose are exporting in Japan

I got to know about two ways of financing by commercial banks to their clients who fulfill at
least one of the categories mentioned above. Re-Finance: Commercial bank will finance their
clients with their own money and FEID on behalf of Bangladesh Bank will later provide funds
to the commercial bank after they made loan to the clients. Pre-Finance: FEID will firstly
match that loan seeking company whether matches those four criteria or not. After that, they
will provide funds to the commercial bank and commercial bank will make loan. This way of
financing is also known as two step loan. In both ways of financing, loan amount per party or
client is fixed to 30 crore BDT.

From this internship, I have learned if FEID permit commercial banks to make loan to any
clients than that company will have to bear an interest rate of total 5.51%. Among this Japanese
company (JICA) will get 0.01%, commercial bank will get remaining 5.50%. From this 5.50%,
Bangladesh Bank will receive 0.5% and Government of Bangladesh will receive 1%.
Commercial bank will ultimately receive 3.50% as his commission at the end.

Furthermore, I have learned about the procedures for making loan.

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  Participating Financial Institutions (PFIS) will firstly approach FEID with required
documents of the client who needs loan.
 FEID will check those documents submitted by commercial banks.
 FEID will perform an inspection on behalf of Bangladesh Bank. They will find out
whether information in those documents are accurate or not.
 FEID will make an inspection report to the Governor of Bangladesh Bank.
 If all conditions are met, commercial bank will collect the amount of loan from central
bank and will make a loan to the client.

In my internship days at the Bangladesh Bank I used their e-library where I worked peacefully
in such a great environment. I can use various articles, journals, thesis paper for enrichment of
my report. I also got help from library personnel regarding my report with various types of
information. Moreover, every personnel from Bangladesh Bank helped me and treated me in a
very supportive and friendly way during my internship days.

This internship program will raise my level of expertise in all areas. My internship has been
immensely fulfilling because of the encouraging environment, helpful supervisor, and excellent
work ethics. These elements have promoted personal development in addition to improving my
professional abilities. I am appreciative that I had the chance to work in such a supportive and
motivating environment, and I know that the knowledge and skills I have gained here will be a
great starting point for my future career aspirations.

4.2 Influence of Internship Program in My Career Development

This internship program was an excellent method to apply my academic learnings into practical
life. I got many opportunities to develop and sharpen my skills throughout this internship
program. Working as an intern at the Central Bank of Bangladesh provided me with ample
opportunities to broaden my knowledge. This internship program helps me to match my
academic learnings with real world scenarios.

 Personal Development: This internship has helped me to get better in communicating

with others, this internship helps me to learn new ways of communication and taught
me various ways to communicate with various personnel. Besides, it broadened my
ability to work as a team, working under pressure in every situation.

 Analytical Skills: Analytical skill means the ability to gather, analyze, and interpret
information to understand problems and make decisions. It is vital in real world

25 | P a g e
 scenarios when conducting daily life operations. Throughout my internship, I got the
opportunity to analyze complex situation and solving them by myself with helps from
my supervisor and other personnel.

 Technical Skills: My supervisor often instructed me to do some mathematical

problems in excel. Besides, he also instructed me to do typing of some circular letters
in both Bangla and English. I also did photocopy and printing. All of these thing helps
me to enrich my technical skills.

 Punctuality and Discipline: During this internship period, I have to present at office
within 10am and have to work till 5pm. I have learned about being punctual by
attending office in time and my professionalism has risen because of this time
management. I have to follow work place ethics during this internship period which
helped me to be more disciplined person.

 Multitasking Ability: I have to often deal with various tasks at same time and have to
complete those tasks efficiently within given time period. This helps me to broaden my
ability of multitasking and time management.

During this internship, I got learnings regarding various things and I strongly believe that these
learnings will benefited me in every aspects of developing my career in the corporate field and
I will be able to utilize these skills more efficiently in real world in the future.

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 Chapter 5: Historical Data Analysis of Variables

5.1 Variables Introduction

There are many variables available as the indicators of economic development of a country by
World Bank. These indicators include Gross Domestic Product (GDP), Gross National Income
(GNI), Healthcare Spending, and Poverty Rate. Among these measures GDP and GNI are the
most popular one. These two are the dependent variables. On the other hand, import, export,
consumer spending, foreign direct investment (FDI), and exchange rates are the independent
variables.
Dependent Variables Independent Variables
 Gross Domestic Product (GDP)  Import
 Gross National Income (GNI)  Export
 Consumer Spending
 Foreign Direct Investment (FDI)
 Exchange Rate

5.2 GDP of Bangladesh

Gross Domestic Product (GDP) is an economic measure of a nation's total income and output
for a given period of time. It is the market value of all final goods and services produced within
a country in a specific period. GDP of a country is used to measure the size of the economy.
Economic growth rate is the percentage changed in the aggregate output (goods and services
produced) form one year to next year.

GDP can be measured in various ways. The most widely way to measure the GDP is the
expenditure approach. In this approach GDP is calculated from the sum of the following factors
of economy:

Consumption (C): Consumption means all household purchases of final goods and services.
It represents the total amount spent on domestically produced goods and services which will
not be resold or used in the production in the next year.

Investment (I): Investment includes all the investment within the country for the year. It not
only includes investment in buildings, equipment etc. but also investment in stocks, bonds.
Final goods (inventory goods) waiting to be sold is also included in the investment.

27 | P a g e
Government Spending (G): Government spending includes all the expenses bear by the
government of a country. It includes purchase of goods and services (Govt. employees' salaries)
by the government.

Net Export (X-M): Net export is the difference of total amount of goods and services produced
in the country and sold outside the country and the goods and services produced by the
foreigners and sold in the country. It can be written as Export-Import.

So, the equation of GDP is Y = C + I + G + (X - M)

5.3 GNI of Bangladesh

Gross National Income (GNI) is the total value of all the goods and services produced by the
residents of a country, both domestically and abroad, in a given period, typically a year. It
includes income earned by citizens and businesses from activities within the country as well as
income earned from investments and work abroad.

As a major indicator of a nation's overall economic performance and level of life, GNI has a
strong connection to economic development. With its ability to measure total economic
production, income distribution, investment capacity, and standard of living, GNI is a valuable
instrument for evaluating a nation's economic progress.

So, the equation of GNI is = GDP + Net Income from Abroad

Economic development indicators GDP and GNI both are dependent variables and connected
with import, export, consumer spending, foreign reserve, and foreign direct investment of a
country. That’s why GDP and GNI have been taken as dependent variable whereas, import,
export, consumer spending, foreign direct investment, and exchange rates of Bangladesh have
been taken as independent variables.

28 | P a g e
5.4 Trend Analysis of GDP and GNI

GDP AND GNI

GDP GNI

$1,000.00
$900.00
$800.00
$700.00
$600.00
$500.00
$400.00
$300.00
$200.00
$100.00
$0.00

Figure 1: GDP and GNI of Bangladesh (2002-2022)

Source: Foreign Exchange Policy Department, Bangladesh Bank

Over the observed period from 2002 to 2022, both GDP and GNI have exhibited an upward
trend, albeit with fluctuations and varying growth rates. GDP began at $54.72 billion in 2002
and increased steadily, experiencing notable jumps in growth particularly between 2007 and
2011, and again from 2016 onwards. By 2022, GDP had surged to $460.20 billion, indicating
substantial economic expansion over the years. Similarly, GNI started at $57.89 billion in 2002,
following a trajectory of consistent growth with occasional fluctuations. Notably, GNI
consistently outpaced GDP growth until around 2016, where after GDP growth accelerated,
likely influenced by factors such as changes in trade dynamics, technological advancements,
and policy shifts. By 2022, GNI had reached $483.36 billion, reflecting both economic growth
and potentially improved income retention within the economy. Despite the variations, both
indicators generally demonstrate positive long-term trends, indicating overall economic
prosperity and development.

5.5 Overview of Import of Bangladesh

Import refers to the act of bringing goods or services into a country from abroad for sale or use.
When a country imports goods, it purchases products or services produced in another country
and brings them across its borders to meet domestic demand.

29 | P a g e
Imports can include a wide range of items, such as raw materials, finished products, machinery,
electronics, and consumer goods. Importing allows countries to access goods that may not be
available domestically or may be more affordable or of higher quality from foreign sources.

5.5.1 Major Import Partner of Bangladesh

Bangladesh imports the largest number of goods and services from China and China supplies
a significant portion of goods to the domestic market of Bangladesh. India also stands as one
of the major trading partner to import goods in Bangladesh.

In terms of total Import share, Bangladesh's Top Import Trading Partners in 2022 were China
(24.58%), India (14.85%), Singapore (5.47%), Indonesia (5.01%), Malaysia (4.24%), Japan
(3.63%), Brazil (3.38%), Saudi Arabia (3.32%), United Arab Emirates (3.23%) and United
States of America (3.1%).

Bangladesh Import Partner

3.38%
3.63% 4.24%
3.32% China

3.23% India
Singapore
3.10%
Indonesia
24.58%
5.01% United States of America
United Arab Emirates
Saudi Arabia
5.47% 14.85%
Brazil
Japan
Malaysia

Figure 2: Major Import Partners of Bangladesh (2022)

Source: Foreign Exchange Policy Department, Bangladesh Bank

5.5.2 Import Trend Analysis

In this figure of import trend analysis from 2002 to 2022 we can see year by year data of import.
Bangladesh is an import based country and the number of total import seems to be increasing
in every year. But in 2020, due to covid-19 pandemic total number of import decreases. In the

30 | P a g e
next year, total number of import increases once again. In 2020, it was a negative growth or
decline in the total number of import in compare to remaining years.

IMPORT TREND ANALYSIS

$120.00

$100.00
$96.17

$80.00
$71.02
$64.92
$63.76
$60.00 $59.18
$48.28 $50.47
$44.13 $46.19
$40.00 $40.14
$37.27
$35.37
$25.11
$23.73
$22.87
$20.00 $18.27
$15.63
$13.89
$10.23
$9.76
$9.06
$0.00

Figure 3: Import Trend Analysis (2002-2022)

Source: Foreign Exchange Policy Department, Bangladesh Bank

5.6 Overview of Export of Bangladesh

Export refers to the act of selling goods or services produced within one country to buyers
located in another country. When a country exports goods or services, it sends them to be sold
or used in foreign markets. Exports are a crucial component of a country's economy,
contributing to economic growth, job creation, and the overall balance of trade.

Exporting goods and services allows Bangladesh to earn foreign exchange, which is vital for
the country's economic stability. This revenue can be used to finance imports, pay off debts,
and invest in infrastructure and development projects. The export-oriented industries in
Bangladesh, such as the ready-made garment (RMG) sector, provide employment to millions
of people, particularly women, contributing significantly to poverty reduction and socio-
economic development. Besides, Export-led growth has been instrumental in reducing poverty
levels in Bangladesh by creating job opportunities, increasing incomes, and improving living
standards for millions of people, especially in rural areas where many export-oriented
industries are located.

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5.6.1 Export Trend Analysis

EXPORT TREND ANALYSIS

$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$0.00
2010

2021
2002
2003
2004
2005
2006
2007
2008
2009

2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

2022
Figure 4: Export Trend Analysis (2002-2022)

Source: Foreign Exchange Policy Department, Bangladesh Bank

In this figure, we can see the total amount of export values from 2002 to 2022. From this data,
we can see the growth of export values whether it has a positive growth or negative growth. In
2020, it was a negative growth or decline in the total number of export in compare to remaining
years. In 2022, the total number of export value was 59.28 billion USD whereas, in 2002 the
value was only 6.79 billion USD.

5.7 Overview of Consumer Spending

Consumer spending refers to the total amount of money spent by households on goods and
services within a given period, typically a month or a year. It encompasses expenditures on a
wide range of items that individuals and families purchase for personal consumption, including
groceries, clothing, housing, transportation, healthcare, entertainment, and other discretionary
items.

Consumer spending is a critical component of a country's economy, as it accounts for a

significant portion of aggregate demand, driving economic activity and influencing business
revenues and investment decisions. Monitoring consumer spending patterns provides valuable

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insights into overall economic trends, consumer confidence, and the health of various
industries.

5.7.1 Trend Analysis of Consumer Spending

CONSUMER SPENDING
$350.00
$300.00

$250.00

$200.00
$150.00

$100.00
$50.00
$0.00
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Figure 5: Consumer Spending (2002-2022)

Source: Foreign Exchange Policy Department, Bangladesh Bank

In this figure, we can see the total amount of consumer spending from 2002 to 2022. Consumer
spending has exhibited a consistent upward trend over the past two decades, with fluctuations
along the way. Starting from $40.57 billion in 2002, spending steadily increased, reaching its
lowest point in 2002 and peaking at $317.89 billion in 2022. The lowest value occurred in
2002, while the highest was recorded in 2022, indicating a substantial expansion in consumer
expenditure over the analyzed period.

5.8 FDI of Bangladesh

FDI stands for Foreign Direct Investment, which refers to the investment made by a company
or individual in one country in business interests in another country, in the form of either
establishing business operations or acquiring business assets in the foreign country. This
investment involves a significant degree of control or influence by the investor over the foreign
business entity.

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FDI plays a crucial role in the global economy, fostering economic growth, job creation,
technology transfer, and infrastructure development in both the investing and recipient
countries.

5.8.1 Historical Data of FDI

FOREIGN DIRECT INVESTMENT (FDI)

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Figure 6: Foreign Direct Investment (2002-2022)

Source: Foreign Exchange Policy Department, Bangladesh Bank

The data represents the trend of Foreign Direct Investment (FDI) inflows over the years from
2002 to 2022. FDI starts at a modest $0.05 billion in 2002 and experiences fluctuations in
subsequent years, with notable increases in 2005, 2008, 2012, and 2013. These years likely
correspond to periods of economic growth or policy changes favoring foreign investment.
However, there are also periods of decline, such as in 2006 and 2017, possibly due to economic
uncertainties or shifts in global investment patterns.

5.9 Recent Conditions of Exchange Rates

Exchange rates refer to the value at which one currency can be converted into another. It's the
rate at which one country's currency can be exchanged for another currency on the foreign
exchange market. Exchange rates are determined by various factors including supply and
demand, interest rates, inflation, economic stability, geopolitical events, and government

34 | P a g e
policies. These rates fluctuate constantly and impact international trade, investment, tourism,
and overall economic activity.

5.9.1 Fluctuations of Exchange Rates

Exchange Rates
0.0200
0.0180
0.0160
0.0140
0.0120
0.0100
0.0080
0.0060
0.0040
0.0020
0.0000
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Figure 7: Exchange Rates of Bangladesh (2003-2022)

Source: Foreign Exchange Policy Department, Bangladesh Bank

The provided exchange rate data illustrates a consistent downward trend in the value of the
currency relative to another over the years. Beginning at 0.0173 in 2003, the exchange rate
steadily declines until 2012, where it experiences a more significant drop. From 2012 to 2017,
the rate fluctuates but generally remains within a lower range. However, from 2018 to 2022,
there's a more pronounced decrease, with the rate falling from 0.0122 to 0.0091 by 2022. This
trend suggests a depreciation in the currency's value over time compared to the currency it is
being exchanged against. Factors such as economic performance, inflation, interest rates, and
geopolitical events likely influenced these fluctuations, contributing to the observed trend in
exchange rates.

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 Chapter 6: Data Analysis

6.1 Descriptive Statistics

In Table 6.1 shows that that economic development factors dependent variables including GDP
has mean value of 189.151and standard deviation for this is 130.565. The maximum and
minimum value for GDP is 460.2 and 54.72. GNI has mean value of 192.757 and standard
deviation 132.935. The maximum and minimum value are 483.36 and 57.89.

Variable Obs Mean Std. Dev. Min Max

GDP 21 189.151 130.565 54.72 460.2
GNI 21 192.757 132.935 57.89 483.36
Import 21 38.355 23.624 9.06 96.17
Export 21 26.7 15.043 6.79 59.28
Consumer Spending 21 132.268 86.584 40.57 317.89
Exchange Rates 21 .014 .002 .009 .017
FDI 21 1.44 .817 .05 2.83

Table 6.1: Descriptive Statistics

The independent variables including import has the mean value of 38.355. The standard
deviation is 23.624, and the maximum and minimum values are 96.17 and 9.06. Export has
mean value of 26.7, standard deviation is 15.043. The maximum and minimum values of export
are 59.28 and 6.79. Consumer spending has a mean value of 132.268 and standard deviation of
86.584. The maximum and minimum values are 317.89 and 40.57. Exchange rate which has
the mean value of 0.014 and standard deviation is 0.002. The maximum and minimum values
are 0.17 and 0.009. FDI has a mean value of 1.44 and standard deviation 0.817. The maximum
and minimum values are 2.83 and 0.05.

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6.2 Correlation Matrix
A correlation matrix provides a way to examine the relationships between variables by
calculating the correlation coefficients between each pair of variables in the dataset.

Variables (1) (2) (3) (4) (5) (6) (7)

(1) GDP 1.000
(2) GNI 0.995 1.000
(3) Import 0.961 0.962 1.000
(4) Export 0.947 0.938 0.989 1.000
(5) Consumer Spending 0.999 0.996 0.969 0.954 1.000
(6) Exchange Rates -0.864 -0.864 -0.944 -0.954 -0.875 1.000
(7) FDI 0.555 0.522 0.666 0.730 0.564 -0.732 1.000

Table 6.2: Correlation Matrix

Here dependent variable are GDP and GNI and independent variable are import, export,
consumer spending, exchange rate and FDI. Correlation matrix shows the relation among the
variables. The dependent variable are strongly correlated with each other. GDP is positively
correlated with the GNI.
The relation of independent variables with dependent variables are positively correlated except
exchange rate. Import, export, consumer spending and FDI have positive relation with GDP
whereas exchange rate has negative relationship with GDP. Correlation with dependent
variable GNI shows that import, export, consumer spending and FDI have positive relation
where exchange rate is negatively correlated with GNI.

6.3 Multiple Linear Regression

Variables GDP GNI

(T-value) (T-value)
Import -1.302*** 2.097**
(-4.13) (2.39)

Export 1.322** -3.587**

(2.51) (-2.45)

Consumer Spending 1.661*** 1.523***

(35.01) (11.54)

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 Exchange Rates 987.76 -3338.324
(0.68) (-0.82)

FDI -1.579 -4.628

(-0.80) (-0.84)
Constant -27.192 59.16
(-1.07) (0.84)
No. Observation 21 21

Table 6.3: Result of Multiple Linear regression

From table 6.3 indicate that import, export and consumer spending have statistically significant
impact on GDP. From this, import has have significant negative relationship with GDP
moreover export and consumer spending has significant positive impact on GDP. Exchange
rate, FDI have no statistically significant impact on GDP but exchange rate has positive and
FDI has negative relation with GDP.
Furthermore table shows that import, export and consumer spending have statistically
significant impact on GNI. Import, consumer spending have positive impact whereas export
has significant negative relation with GNI. Exchange rate, FDI have no statistically significant
impact but shows negative relation with GNI.

38 | P a g e
 Chapter 7: Findings, Recommendations, and Conclusions
7.1 Findings
The detailed analysis of the data reveals intricate relationships between key economic
indicators, namely Gross Domestic Product (GDP), Gross National Income (GNI), exports,
imports, and consumer spending.

The analysis has identified a statistically significant positive relationship between both exports
and consumer spending with GDP. This implies that an increase in either exports or consumer
spending is associated with an increase in GDP. The positive correlation with exports suggests
that when a country sells more goods and services abroad, it positively impacts its economic
output. Similarly, the positive relationship with consumer spending indicates that higher
domestic consumption also contributes to the country's overall economic performance. The
data shows a significant negative relationship between imports and GDP. This finding suggests
that an increase in imports is associated with a decrease in GDP. A negative relationship with
imports could indicate that higher import levels may be substituting domestic production,
potentially leading to a lower GDP.

There is a statistically significant positive relationship between both imports and consumer
spending with GNI. The positive relationship of import with GNI suggests that these imports
could be beneficial for the economy, potentially because they include capital goods that
increase productivity, consumer goods that satisfy domestic demand not met by local
production, or because they stimulate economic activity in sectors related to distribution and
retail. Consumer spending is a direct component of GNI, when consumer spending increases,
it directly contributes to an increase in GNI by boosting economic activity within the country.
A significant negative relationship between exports and Gross National Income (GNI). There
could be a reason that high reliance on imported materials for exports, profits from exports
being sent abroad, and a shift in the economy towards sectors less reliant on exports.

7.2 Recommendation
Based on the analysis, it is recommended that policymakers focus on strategies to enhance
exports and stimulate consumer spending to positively impact GDP. In-depth considerations
for policymakers include implementing targeted initiatives to enhance export competitiveness.
This could involve investing in research and development to foster innovation, improving
infrastructure for efficient logistics, and establishing strategic trade partnerships to expand

39 | P a g e
market access. Additionally, policymakers should explore measures to stimulate consumer
spending, such as tax incentives, subsidies for key industries, and social welfare programs that
enhance purchasing power. Managing imports wisely necessitates a careful examination of the
composition of imported goods. Policymakers may consider implementing tariffs or quotas
selectively to protect domestic industries while allowing the entry of essential capital goods
that contribute to increased productivity. Moreover, fostering a robust domestic manufacturing
sector could address the substitution of domestic production by imports, contributing positively
to GDP. Mitigating the negative impact of high imports on GDP is crucial.

Furthermore, addressing the negative relationship between exports and GNI calls for a closer
examination of the factors influencing this dynamic, with a potential emphasis on reducing
reliance on imported materials for exports and retaining profits domestically. Overall, a
balanced approach to trade policies and domestic economic drivers is essential for sustained
economic growth. In conclusion, a nuanced and comprehensive approach to trade policies and
domestic economic drivers is crucial for sustained economic growth.

7.3 Conclusion
During the three months of my internship tenure at FEPD and FEID of Bangladesh Bank I have
gain a practical knowledge about the activities of the Central Bank and an exposure of corporate
environment comparing the theoretical knowledge. I have spent my internship tenure by
attaching to all the sections for a specific time period to gather practical experience of each of
the sections and to observe the activities of all the sections of FEPD and FEID. Though all
sections of FEPD and FEID are covered in the internship program but it is not possible to go
to the depth of each activity of each section of the department due to time limitations. However
highest efforts have been given to achieve the objectives of the internship program. This report
has attempted to explain the practical experience of the banking and activities are performed
by Foreign Exchange Policy Department and Foreign Exchange Investment Department of
Bangladesh Bank and attempt to harmonize and link theoretical knowledge, acquired in the
program with the practical experience gather in the three months internship tenure.

40 | P a g e
 Appendix

Appendix 1: Historical Data of Variables (2003-2022) (in Billion USD)

Year Independent Variables Dependent Variables
Import Export Consumer Exchange Foreign Direct GDP GNI
Spending Rates Investment
2022 $96.17 $59.28 $317.89 0.0091 $1.56 $460.20 $483.36
2021 $71.02 $44.39 $286.29 0.0118 $1.72 $416.26 $435.53
2020 $59.18 $39.05 $250.33 0.0118 $1.53 $373.90 $385.22
2019 $64.92 $45.99 $234.90 0.0119 $1.91 $351.24 $366.49
2018 $63.76 $40.73 $217.22 0.0122 $2.42 $321.38 $329.87
2017 $50.47 $37.66 $196.56 0.0126 $1.81 $293.75 $266.71
2016 $46.19 $36.92 $177.35 0.0129 $2.33 $265.24 $225.57
2015 $48.28 $33.82 $141.31 0.0129 $2.83 $195.08 $191.31
2014 $44.13 $32.83 $125.47 0.0129 $2.54 $172.89 $171.25
2013 $40.14 $29.30 $109.26 0.0125 $2.60 $149.99 $158.83
2012 $37.27 $26.89 $98.33 0.0126 $1.58 $133.36 $146.86
2011 $35.37 $25.63 $95.55 0.0141 $1.26 $128.64 $133.34
2010 $25.11 $18.47 $85.44 0.0145 $1.23 $115.28 $118.31
2009 $23.73 $17.36 $76.42 0.0145 $0.90 $102.48 $106.13
2008 $22.87 $16.18 $69.30 0.0146 $1.33 $91.63 $95.70
2007 $18.27 $13.53 $58.83 0.0145 $0.65 $79.61 $86.32
2006 $15.63 $11.74 $52.52 0.0149 $0.46 $71.82 $80.89
2005 $13.89 $9.99 $51.22 0.0163 $0.81 $69.44 $76.60
2004 $10.23 $7.26 $47.94 0.0169 $0.45 $65.11 $69.52
2003 $9.76 $6.88 $44.93 0.0173 $0.27 $60.16 $62.20

41 | P a g e
Appendix 2: Linear Regression (GDP)

GDP Coef. St.Err. t- p- [95% Conf Interval] Sig

value value

Import -1.302 .316 -4.13 .001 -1.975 -.63 ***

Export 1.322 .527 2.51 .024 .199 2.446 **
Consumer 1.661 .047 35.01 0 1.56 1.762 ***
Spending
ExchangeRates 987.76 1461.946 0.68 .51 -2128.305 4103.825
FDI -1.579 1.969 -0.80 .435 -5.776 2.619
Constant -27.192 25.301 -1.07 .299 -81.12 26.737

Mean dependent var 189.151 SD dependent var 130.565

R-squared 0.999 Number of obs 21
F-test 5249.973 Prob > F 0.000
Akaike crit. (AIC) 118.363 Bayesian crit. (BIC) 124.630

*** p<.01, ** p<.05, * p<.1

Appendix 3: Linear Regression (GNP)

GNI Coef. St.Err. t-value p-value [95% Conf Interval] Sig
Import 2.097 .878 2.39 .03 .226 3.968 **
Export -3.587 1.467 -2.45 .027 -6.714 -.461 **
ConsumerSpending 1.523 .132 11.54 0 1.241 1.804 ***
ExchangeRates -3338.324 4067.009 -0.82 .425 -12006.948 5330.3
FDI -4.628 5.478 -0.84 .411 -16.304 7.048
Constant 59.16 70.386 0.84 .414 -90.864 209.185

Mean dependent var 192.757 SD dependent var 132.935

R-squared 0.996 Number of obs 21
F-test 700.629 Prob > F 0.000
Akaike crit. (AIC) 161.335 Bayesian crit. (BIC) 167.602
*** p<.01, ** p<.05, * p<.1

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