Asymmetric Exchange Rate Pass-Through in Bangladesh: Does Price Level React Differently During the Periods of Currency Depreciation

This study investigates the asymmetric effects of exchange rate changes on Bangladesh's price level using monthly data from January 1986 to July 2020. Employing the Nonlinear Autoregressive Distributed Lag (NARDL) framework with positive and negative partial sum decomposition of nominal effective exchange rates, we estimate exchange rate pass-through (ERPT) to both consumer and producer prices. Our findings reveal significant asymmetries: consumer prices respond more strongly to currency depreciation than appreciation in the long run, with a 10% depreciation increasing consumer prices by 0.65% compared to a 0.40% decrease from appreciation. Producer prices exhibit the opposite pattern, transmitting appreciations more than depreciations in both short and long run. These results provide crucial insights for monetary policy formulation in small open economies facing frequent exchange rate volatility. Keywords: Exchange rate pass-through (ERPT), Price asymmetry, NARDL, Bangladesh, Monetary policy JEL Classification: C22, E31, F31, F41 DOI: 10.7176/JESD/17-2-02 Publication date: February 28 th 2026