While the official exchange rate of the taka floats relative to the US
dollar, government intervention in international trade has resulted in some
distortions in the prevailing rate of exchange. A shadow exchange rate factor
of 1.25 has been used in the economic analysis to revalue border prices of
tradable items. The opportunity cost of labor was derived by adjusting the
prevailing (market) wage rate by a factor of 0.8 in line with estimated levels
of seasonal unemployment, and underemployment in the Project areas.
The factor of 0.8 is also consistent with other project analysis conducted in
Bangladesh during the same time period.