3105: principles of Taxation 1 

Daily class note 

Foreign Exchange (lecture: 15; 31st March 2019) 

 
Exchange of currency and its contribution to the economy: 
 
*initial exchange rate between Dollar to TK= $1: tk 65 
 
➔ Appreciation of currency= $1:tk 60 ( appreciation of tk and depreciation of dollar) 
Appreciation of tk is more favourable for import and so import related business will thrive. 
➔ Depreciation of currency = $ 1 : tk 70 (depreciation of tk and appreciation of dollar) 
Depreciation of tk is more favourable for export and so export related business will thrive. 
 
Consequences of this exchange: 
● Balance of trade= net value of export - net value of import 
● Balance of payment= balance of trade ± foreign remitance ± foreign grants ± foreign 
loans ± others 
 
Question or issue to discuss: 
✓ What are the factors determining foreign exchange between two countries? 
✓ Foreign reserve creates claim to foreign resources. 
✓ We set our standard of living through the consumption of resources produced both inland and 
foreign places. 
✓ Trade relation between two countries make it easy to exchange resources between two countries. 
 
 
 
Some of the Points picked up form teacher’s entire lecture 

★ Dollar is universally accepted currency 

★ Foreign currencies need to be converted into dollar first 
★ Foreign exchange is a part of public financing 
★ Standard of living sets priority of our resource consumption  
★ Trade relation is very important in terms of foreign exchange 
★ When the demand for dollar increases, dollar becomes stronger against any particular currency and 
which in turn creates the depreciation of that particular currency  
★ Enough foreign reserve currency makes country safer 
★ Balance of trade negative for Bangladesh because of excessive import 
★ Balance of payment positive for Bangladesh because of excessive foreign remittance