In 1971, East Pakistan became the independent nation of Bangladesh with the Pakistan Rupee as domestic currency. The taka became Bangladesh's currency in 1972, replacing the
Pakistani rupee at par. The word "taka" is derived from the
Sanskrit term tanka which was an ancient denomination of
silver coin. The term taka was widely used in different parts of India but with varying meanings. In north India, taka was a
copper coin equal to two
paise and in the south, it was equal to four paisa or one
anna. It was only in
Bengal and
Orissa where taka was equal to the rupee. In all areas of India, taka was used informally for
money in general. However, Bengal was the stronghold of the taka.
The
rupee was introduced by the
Turko-
Afghan rulers and was strongly upheld by the
Mughals and the
British rulers. The
Bengali people always used the word taka for the rupee, whether silver or
gold.
Ibn Battuta, the
Arab traveller, noticed that, in Bengal, people described gold coins (
Dinar) as gold tanka and silver coin as silver tanka. In other words, whatever might be the metallic content of the coin, the people called it taka. This tradition has been followed to this day in eastern regions like
Bangladesh,
West Bengal,
Tripura,
Orissa, and
Assam. The
Indian rupee is officially known as টাকা ṭaka in
Bengali, টকা tôka in
Assamese, and ଟଙ୍କା ṭôngka in
Oriya, and is written as such on Indian banknotes.
[
edit] Issuing authority
Currency notes and coins of the taka are issued by the
Bangladesh Bank which is the central bank of
Bangladesh. Currency notes bear the signature of the governor of the Bangladesh Bank who promises to pay the equivalent value in exchange. The exception is the one taka note. In this case it is the
Ministry of Finance of the
Government of Bangladesh that shoulders the responsibility. One taka notes bear the signature of the Finance Secretary to the government.
[
edit] Value fluctuation
At independence the value of the taka, Bangladesh's unit of currency, was set between 7.5 and 8.0 to US$1.
[1] With the exception of fiscal year 1978, the taka's value relative to the dollar declined every year from 1971 through the end of 1987.
[1] To help offset this phenomenon, Bangladesh first used the compensatory financing facility of the International Monetary Fund in fiscal year 1974.
[1] Despite the increasing need for assistance, the Mujib government was initially unwilling to meet the IMF's conditions on monetary and fiscal policy.
[1] 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.
[1]Between 1980 and 1983, the taka sustained a decline of some 50 percent because of a deterioration in Bangladesh's balance of payments.
[1] 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.
[1] 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.
[1] In mid-1987, the official rate was relatively stable, approaching less than Tk31 to US$1.
[1]
