Bangladeshi Taka - Value Fluctuation

Value Fluctuation

Upon Bangladesh's independence, the value of the Bangladeshi taka was set between 7.5 and 8.0 to US$1. With the exception of fiscal year 1978, the taka's value relative to the US dollar declined every year from 1971 through the end of 1987. To help offset this phenomenon, Bangladesh first used the compensatory financing facility of the International Monetary Fund in fiscal year 1974. Despite the increasing need for assistance, the Mujib government was initially unwilling to meet the IMF's conditions on monetary and fiscal policy. By fiscal year 1975, however, the government revised its stance, declaring a devaluation of the taka by 56 percent and agreeing to the establishment by the World Bank of the Bangladesh Aid Group.

Between 1980 and 1983, the taka sustained a decline of some 50 percent because of a deterioration in Bangladesh's balance of payments. Between 1985 and 1987, the taka was adjusted in frequent incremental steps, stabilizing again around 12 percent lower in real terms against the United States dollar, but at the same time narrowing the difference between the official rate and the preferential secondary rate from 15 percent to 7.5 percent. Accompanying this structural adjustment was an expansion in the amount of trade conducted at the secondary rate, to 53 percent of total exports and 28 percent of total imports. In mid-1987, the official rate was relatively stable, approaching less than Tk31 to US$1. In January 2011, one US dollar was equivalent to approximately 72 Bangladeshi taka and as of 21 April 2012, one US dollar is worth close to 82 Bangladeshi taka.