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The debate on what would be an appropriate exchange rate regime for a developing country operating a semi-open economy, i.e. whether the exchange rate should be primarily fixed or primarily floating, has never been satisfactorily concluded. During the 1990s there arose a strong body of opinion that prefers a floating to the quasi-fixed crawling peg type regimes that are currently in vogue over much of the developing world. This view is based partly on the premise that markets should determine exchange rates and partly on the contention that any discrepancy between the official and parallel rates of exchange indicates a hidden subsidy paid to those who can acquire foreign exchange at the official rate by those who cannot. These points of view are not without justification. However, on the other side of the coin, freely floating rates, whatever their theoretical merits, have not, at a purely pragmatic level, proved to be the panacea they were claimed to be. This long-standing policy dilemma is addressed from the perspective of Bangladesh, where the Government is currently looking at the trade-offs involved in pursuing one or the other course. Broadly speaking, the author favours the existing arrangements that revolve around an adjustable peg, with little, if anything, to be gained by shifting to a floating rate regime.

The Asia-Pacific Development Journal (APDJ) is published twice a year by the Macroeconomic Policy and Development Division of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

The primary objective of the APDJ is to provide a platform for the exchange of knowledge, experience, ideas, information and data on all aspects of economic and social development issues and concerns facing the region and to stimulate policy debate and assist in the formulation of policy.

The development experience in the Asian and Pacific region has stood out as an extraordinary example of what can be achieved when policymakers, experts, scholars and people at large harness their creativity, knowledge and foresight. The Asia-Pacific Development Journal has been a proud partner in this process, providing a scholarly means for bringing together research work by eminent social scientists and development practitioners from the region and beyond for use by a variety of stakeholders. Over the years, the Journal has emerged as a key United Nations publication in telling the Asian and Pacific development story in a concise, coherent and impartial manner to stimulate policy debate and assist in the formulation of policy in the region.