Official Exchange Rate

An exchange rate is the price of a unit of foreign currency is expressed in terms of the domestic
currency. The exchange rate is determined by making a comparison of Local Currency Unit
(LCU) with the US$. Exchange rates revealed in this script are the average of a particular year.
In order to explain the trend of Malaysian exchange rate and to compare it with the exchange
rates of Bangladesh data rangers for 10 years from 2008 to 2017 is represented here.

In Malaysia

In 2008 for every single US$ Malaysia must have to pay on average 3.34 RM. In the subsequent
year the value of the Malaysian ringgit was decreased and then it was 3.52 for every US$.
Afterward, the exchange rate of the Malaysian ringgit was 3.22 RM in 2010. For the next
following years, the worth of Malaysian ringgit had been increasing against the US$. The
exchange rate was 3.06, 3.09 and 3.15 in the years of 2011,2012 and 2013 respectively (Zijlstra,
Vaira and Boothe, 2017). But the value of RM was diminished in 2014. In that year the rate was
3.27 which was highest after 2009. After that, the exchange rate was increasing with the passing
of years. The succeeding year continued with an average of 3.91 RM for every single US$ which
was 4.15 in the next year. According to the databank of the world bank, the exchange rate of
Malaysian Ringgit against the US Dollar was 4.30. the government of Malaysia is targeting to
maintain the exchange rate and stabilize it within control.

In Bangladesh

In Bangladesh, the exchange rate is quite high compared with the rate of Malaysian ringgit.
Bangladesh bank agreed to pay BDT Tk. 68.60 on average for every single USD$ in 2008.
Within 10 years the rate increasing to BDT Tk. 80.44. the rate increases by more than 17%
within these years. this rate was increasing gradually up to 2012. The rate was BDT TK.
69.04,69.65 and 74.15 for the years of 2009,2010 and 2011 respectively. In 2012 the exchange
rate of BDT TK against USD$ was 81.86. It was the highest rate for the range from 2008 to
2017. After that, the next two years the rate was falling significantly. In 2013 and 2014 the rate
was BDT TK. 78.10 and 77.64 respectively (Statista.com, 2018). According to the information
of world bank, Bangladesh bank had to pay on average BDT Tk. 80.44 in order to purchase 1
USD$ in 2017.
Real Interest Rate
A real interest rate refers to an interest rate that has been adjusted to remove the effects of
inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an
investor. In order to get the real interest rate of any economy the inflation rate (Expected or
Actual) is deducted from the Nominal Interest Rate (Ray, 2013). Though the real interest rate of
Malaysia in 2017 couldn’t be founded, the time scope for this component of monetary policy
ranged from 2008 to 2017. The figures are represented in this paper in percentage form.

In Malaysia

Bank Negara Malaysia for the time being, uses interest rate targeting model for monetary policy.
The real interest rate of Malaysia is the combination of both positive and negative volume. In the
year 2008, 2010 and 2011 the value was in the negative figure in Malaysia. The real interest rate
for Malaysia was -3.90% in 2008 which was increased to 11.78% in the next year. It represents
the highest value of the real interest rate of Malaysia within the period from 2008 to 2017. The
rate was increased by more than 400% than the previous year. In 2010 the figure was again in
negative value and it was -2.11%. After that, the next year is followed by the real interest rate in
Malaysia with -0.47%. the following two years the rate was in increasing format and those are
3.75 and 4.43 in 2012 and 2013 respectively. In 2014 the rate was once again decreased to
2.07%. though the rate was almost the same in 2016, the figure was different in 2015. The real
interest rate increased by more than two times in 2015 compared to 2014.

In Bangladesh

The real interest rate of Bangladesh is in a stable position within the range of 2008 to 2017. Like
Malaysia, Bangladesh didn’t face any negative real interest rate yet. In 2008 the rate was 4.66%
which was increased to 6.15% in the following year. The rate was boosted by nearly 1.5%. The
next years, 2010, the rate was failing to 4.74% (Bb.org.bd, 2019). For the next two years, the rate
was within the below 6%. But after that in 2014, the rate was 6.89% which was the highest at
that time. For the following year, the rate was 5.51%, 3,45% and 3.07% in 2015, 2016 and 2017
correspondingly. The difference between the highest and lowest real interest rate was 3.82%
which was 15 and a half percent in the case of Malaysia. The real interest rate in Bangladesh was
very low in 2017.
Unemployment Rate
The unemployment rate is defined as the percentage of unemployed workers in the total labor
force including workers who currently do not work, despite the fact that they are able and willing
to do so. In this content, the unemployment rate of Bangladesh, as well as Malaysia, is
represented as a percentage of the total labor force. The rate is estimated by the nations and here
the time range is 10 years ranged from 2008 to 2017to make the comparison happen.

In Malaysia

The rate of unemployment in Malaysia is holding quite better position than Bangladesh. The rate
was nearly 3% on average for the last 10 years because they did not allowed the inflation to grow
beyond 4% after 2009. The highest rate was 3.6% in 2009 where the lowest one lied in 2014.
The difference between the rate among the years is only 7%. But according to the data from the
appendix, it appears that the rate was increased for the last two years. it would be an alarming
condition for the country if it is not taken care of. In 2008 the rate was 3.3% and the next year
was holding the highest rate of 3.6%. the moderate condition of the unemployment rate in
Malaysia was 2012. Though the rate was low compared to Bangladesh, the unemployment rate
of Malaysia is fluctuating where Bangladesh holds the reputation of stable and decreasing trend
in recent years.

In Bangladesh

The unemployment rate in Bangladesh is quite stable. Among other monetary policy factors,
Bangladesh has achieved a significant level in the field of the unemployment rate. Until 2013 the
unemployment rate is fluctuating as our inflation rate was really high. In 2008 the unemployment
rate was 4.2% and the following year it had increased to 5%. In 2010 and 2011 the
unemployment rate was 3.4% and 3.7% respectively (Ycharts.com, 2018). Nearly 3.9% of the
unemployment rate was preserved by Bangladesh in the period of 2012. After that from 2013 to
2017 the rate was fixed at 4.4% on average. According to the economists, Bangladesh has
achieved a remarkable stage in this regard. The reason behind this were increasing GDP and
decreasing inflation rate in last few years.
References

Bb.org.bd. (2019). Economic data. [online] Available at: https://www.bb.org.bd/econdata/

[Accessed 24 Jan. 2019].

Ceicdata.com. (2018). Malaysia | MY: Real Interest Rate | Economic Indicators. [online]
Available at: https://www.ceicdata.com/en/malaysia/interest-rates/my-real-interest-rate
[Accessed 24 Jan. 2019].

UKEssays. November 2018. Monetary policy in Malaysia. [online]. Available from:

https://www.ukessays.com/essays/economics/monetary-policy-in-malaysia-economics-
essay.php?vref=1 [Accessed 25 January 2019].

Statista.com. (2018). Bangladesh - unemployment rate 2007 to 2017 | Statistic. [online]

Statista.com. Available at: https://www.statista.com/statistics/808225/unemployment-rate-in-
bangladesh/ [Accessed 11 Jan. 2019].

Ycharts.com. (2018). Bangladesh Real Interest Rate (Yearly, NSA). [online] Available at:
https://ycharts.com/indicators/bangladesh_real_interest_rate [Accessed 14 Jan. 2019].

Ycharts.com. (2017). US Dollar to Malaysian Ringgit Exchange Rate (Market Daily, MYR to 1
USD). [online] Available at: https://ycharts.com/indicators/malaysian_ringitt_exchange_rate
[Accessed 24 Jan. 2019].

Zijlstra, A., Vaira, C. and Boothe, R. (2017). Open data readiness assessment: Malaysia. [online]
Documents.worldbank.org. Available at:
http://documents.worldbank.org/curated/en/529011495523087262/Open-data-readiness-
assessment-Malaysia [Accessed 24 Jan. 2019].

Zulkhibri Abdul Majid, M. (2012). Measuring monetary conditions in a small open economy: the
case of Malaysia. Journal of Financial Economic Policy, 4(3), pp.218-231.

 
(Bb.org.bd, 2019)
(Ceicdata.com, 2018)
(Statista.com, 2018).
(Ycharts.com, 2017)
(Zulkhibri Abdul Majid, 2012)
Appendix

Table 1- Official exchange rate (LCU per US$, period average)

Years Bangladesh Malaysia

2008 68.60 3.34
2009 69.04 3.52
2010 69.65 3.22
2011 74.15 3.06
2012 81.86 3.09
2013 78.10 3.15
2014 77.64 3.27
2015 77.95 3.91
2016 78.47 4.15
2017 80.44 4.30

Table 2- Real interest rate (%)

Years Bangladesh Malaysia

2008 4.66 -3.90
2009 6.15 11.78
2010 4.74 -2.11
2011 5.06 -0.47
2012 5.34 3.75
2013 5.99 4.43
2014 6.89 2.07
2015 5.51 4.98
2016 3.45 2.54
2017 3.07
Table 3- Unemployment, total (% of total labor force) (national estimate)

Years Bangladesh Malaysia

2008 4.24 3.34
2009 5.00 3.62
2010 3.38 3.32
2011 3.65 3.09
2012 3.91 3.04
2013 4.43 3.14
2014 4.43 2.89
2015 4.43 3.10
2016 4.35 3.44
2017 4.37 3.41