Bangladesh Studies
Bangladesh Studies
  • Home
  • Bangladesh
    • Foreword
    • Acknowledgements
    • Preface
  • Country Profile
    • Country
    • Geography
    • Society
    • Economy
    • Transportation and Communications
    • Government and Politics
    • National Security
  • Introduction
    • bangladesh studies>
      • Chapter 1 - Historical Setting >
        • EARLY HISTORY, 1000 B.C.-A.D. 1202
        • Islamization of Bengal, 1202-1757
        • European Colonization, 1757-1857>
          • Early Settlements
          • The British Raj
        • Pakistan Period , 1947-71>
          • Transition to Nationhood, 1947-58
          • The "Revolution" of Ayub Khan, 1958-66
          • Emerging Discontent, 1966-70
          • The War for Bangladeshi Independence, 1971
        • Birth of Bangladesh>
          • Early Independence Period, 1971-72
          • Fall of the Bangabandhu, 1972-75
          • Restoration of Military Rule, 1975-77
          • The Zia Regime and Its Aftermath, 1977-82
      • Chapter 2 - The Society and Its Environment>
        • Geography>
          • The Land
          • Climate
          • River Systems
        • Population>
          • Population Structure and Settlement Patterns
          • Migration
          • Population Control
        • Social System >
          • Transition to a New Social Order
          • Rural Society
          • Urban Society
          • Women's Role in Society
          • Social Classes and Stratification
        • Religion>
          • Islam
          • Hinduism
          • Buddhism
          • Christianity
        • Education>
          • The British Legacy
          • Education System
          • Religious Education
          • Education Planning and Policy
        • Health>
          • Disease and Disease Control
          • Health Care Facilities
          • Medical Education and Training
      • Chapter 3. The Economy>
        • Economic Context >
          • Historical Perspective
          • Economic Reconstruction after Independence
        • Managing the Economy>
          • Economic Policy and Planning
          • Government Budget Process>
            • Revenue Budget
            • Development Budget
        • Joint Ventures and Foreign Investment
        • Money and Banking>
          • Currency Fluctuation
          • The Banking System
        • Foreign Assistance >
          • Test Case for Development
          • Aid Dependence>
            • International Banks
            • United Nations
            • Foreign Governments and Private Donors
        • Agriculture>
          • Structure of Agricultural Production
          • Food Crops
          • Industrial Crops
        • Industry>
          • Traditional Sectors
          • Ready-made Garments
          • Other Industries
          • Mineral Development
          • Technological Advances
        • Foreign Trade >
          • Export Sectors
          • Balance and Terms of Trade
        • Transportation and Communications>
          • Inland Waterways and Ports
          • Road Transportation
          • Railroads
          • Civil Aviation
          • Telecommunications
          • Tourism
        • Problems and Prospects
      • Chapter 4 - Government and Politics>
        • Structure of Government>
          • Constitution
          • Legislature
          • Executive>
            • Presidency
            • Council of Ministers
          • Judiciary
          • Civil Service
          • Local Administration
        • The Ershad Period>
          • Achieving Stability, 1982-83
          • Emerging Opposition, 1983-86
          • Relaxation of Martial Law, 1986-87
          • More Opposition Pressure
        • Political Dynamics >
          • Local Elites
          • The National Party
          • Party Politics>
            • Awami League
            • Bangladesh National Party
            • Islamic Parties
            • Alliances
            • Workers and Students
            • Women in Politics
        • The Media
        • Foreign Policy >
          • South and Southeast Asia>
            • India
            • Pakistan
            • Other Nations
          • China and Other Asian Nations
          • The Islamic World
          • The Superpowers>
            • United States
            • Soviet Union
          • Western Europe, Canada, Australia, and New Zealand
          • International Organizations
      • Chapter 5 - National Security>
        • Armed Forces and Society>
          • Colonial Origins
          • Pakistan Era
          • The Liberation War
          • Postindependence Period
        • Organization of the Armed Forces>
          • Legal Basis
          • Recruitment
          • Mission>
            • National Defense
            • Intelligence and Security
          • Security Environment
          • Defense Spending
          • Foreign Acquisitions and Ties
        • The Three Services>
          • Army
          • Navy
          • Air Force
        • Auxiliary Forces >
          • Bangladesh Rifles
          • Ansars
          • Police
          • Village Defence Party
        • Public Order and Internal Security>
          • Violence and Crime
          • Insurgency in the Chittagong Hills
          • Criminal Justice
          • The Military in the Late 1980's
  • Bibliography
  • Glossary
  • About us
  • Contract us
Money and Banking

Rickshaws passing University of Dhaka
Courtesy Siria Lopez

Currency Fluctuation

At independence the value of the taka, Bangladesh's unit of currency, was set between 7.5 and 8.0 to US$1. With the exception of FY 1978, the taka's value relative to the 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 (IMF--see Glossary) in FY 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 FY1975, 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 (see Foreign Assistance , this ch.).

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 Tk81 to US$1.

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