BDT - Bangladeshi Taka

The History of Bangladeshi Taka

In 1947, Bengal was divided, and East Bengal became the eastern wing of Pakistan, later renamed East Pakistan in 1956. During this period, the Pakistani Rupee was used, with the word “taka” inscribed on both coins and banknotes. 

In 1972, following the independence of eastern wing of the union and later the independence of Bangladesh, the Bangladeshi Taka was officially introduced as the new currency of the country.

Before the Liberation war in 1971, banknotes issued by the State Bank of Pakistan were circulating in Bangladesh. These banknotes continue so in Bangladesh for three months more, and then were replaced by the Bangladeshi Taka. 

Since its introduction in 1972, the Bangladeshi Taka has undergone several design changes and adjustments in denominations to meet market demands. Initially, the Taka was printed on paper currency, but later, coins were introduced alongside paper notes with various denominations. 

In recent years, Bangladesh Bank has issued various commemorative banknotes to mark significant national milestones. In 2011, a ৳40 note was introduced to celebrate the “40th Victory Anniversary of Bangladesh.” Later on in 2012, a ৳60 note was released to commemorate “60 years of National Movement.” 

Similarly, on 26 January 2013, a ৳25 note was issued to honor the silver jubilee (25th anniversary) of the Security Printing Corporation (Bangladesh) Ltd. Later that year, on 8 July 2013, a ৳100 note was launched to celebrate the 100th anniversary of the Bangladesh National Museum. These commemorative notes not only represent key moments in the nation’s history but also highlight the evolving significance of currency in national identity.

Currencies circulated in Bangladesh

• Indian Rupee: Before 1947, when this region was part of India, the Indian Rupee was the official currency in circulation.

• Pakistani Rupee: After becoming East Pakistan, the region adopted the Pakistani Rupee as its official currency.

• Bangladeshi Taka: Following independence in 1971, Bangladesh officially introduced the Bangladeshi Taka on 4 March 1972, replacing the previously used Pakistani Rupee.

Bangladeshi Taka (BDT) denominations

The Bangladeshi Taka currently circulates in both coins and banknotes in the following denominations:

• Coins: 1 Taka, 2 Taka, and 5 Taka. All the Taka coins feature the National emblem of Bangladesh on its reserve. On the observe, images of Hilsha fish, family figure, Sheikh Mujibur Rahman - a renowned Bangladeshi politician - and so on.

• Banknotes: 2 Taka, 5 Taka, 10 Taka, 20 Taka, 50 Taka, 100 Taka, 500 Taka, and 1000 Taka. Most of the new notes, except for the 1 Taka, prominently feature a portrait of Sheikh Mujibur Rahman on the front, along with a watermark depicting the National Martyrs' Memorial. This change aims to enhance security and modernize the currency. 

One Taka is subdivided into 100 smaller units called poysha. Poysha is no longer in circulation, but it is still used for accounting purposes. Bangladeshi Taka coins are typically made from durable metal alloys designed to resist wear, while Bangladeshi Taka banknotes are now produced using polymer, which enhances their durability and provides effective anti-counterfeiting protection.

Features affecting the value of Bangladeshi Taka

The value of the Bangladeshi Taka is influenced by various factors including the economy, monetary policy, politics, and society, as outlined below:

• Global Economic Outlook: The global economy and international trade relations significantly impact the value of the Bangladeshi Taka. A global economic downturn reduces the demand for investments and imports from Bangladesh by its major trade partners, leading to a decline in the value of the BDT.

• Monetary Policy: Adjustments to interest rates by the Bangladesh Central Bank affect the money supply and, in turn, the value of the Taka. Higher interest rates attract foreign investments, which can increase the BDT's value. However, loose monetary policies that result in increased money supply may reduce the value of the Taka.

• Inflation Rate: High inflation reduces the purchasing power of the Taka, negatively impacting its value. The central bank must carefully manage inflation to maintain the currency’s value. In recent years, inflation in Bangladesh has been driven increased food prices, energy costs, and the global inflationary trend following the COVID-19 pandemic.

• Balance of Payments: If Bangladesh exports more than it imports, income rises, boosting the value of the BDT. Conversely, a trade deficit can weaken the currency.

• Political Factors: Political stability attracts foreign investment, enhancing the Taka's value. In contrast, political instability can lead to capital flight and depreciation of the currency. Currently, Bangladesh is experiencing significant unrest and political violence, which poses risks to the economy and undermines confidence in the Taka.

The value of the Bangladeshi Taka is influenced by various factors. Therefore, monitoring and assessing these elements is crucial to understanding fluctuations in this currency on the market. Maintaining the stability and value of the Taka is essential for the future economic prospects of the country. By staying informed about economic conditions, inflation rates, and political stability, stakeholders can better navigate the complexities of the financial landscape in Bangladesh.