This paper attempted to study the trend of exchange rate of American currency in term of Bangladeshi currency. Time series analysis of the data of exchange rate from year 1971-72 to 2014-15 has been performed to find out the trend of the rate, and then obtain the best Auto-regressive Integrated Moving Average (ARIMA) model from all the possible ARIMA models that could be used to fit the data. After applying Box-Jenkins methodology, the best fitted ARIMA (2, 1, 1) model has been obtained. Finally, forecasting has been made for USD in term of BDT from year 2015-16 to 2019-20. The predicted rates of USD (in taka) are found as following: 80.63, 83.99, 86.02, 87.07, and 88.23 for the fiscal years 2015-16, 2016-17, 2017-18, 2018-19, and 2019-20 respectively. Along with the point estimate, interval estimation has also been made for both 80% and 95% confidence intervals. The trend of the value of dollar in terms of taka is increasing over the years, which is alarming for the economy of Bangladesh. It is high time to take necessary steps to reduce the gap between the currencies of Bangladesh and other developed countries. Relevant researches should be conducted to learn the major factors affecting the values of Bangladeshi taka. Central bank of Bangladesh should monitor the inflation and work wisely for the proper maintenance of exchange rate. Government should make plan to decrease the amount of debt gradually to ensure reduced gap between USD and BDT. As political stability is a must for the value of a country’s currency, it the responsibility of both the ruling party and the opposition party to ensure that there is no political instability for the sake of the country’s economy.

DOI: 10.5281/zenodo.3369751

Sharing is caring!