Bangladeshi Taka Takes A Hit Amid Turmoil After Fall Of Sheikh Hasina Government

Since 2022, the domestic currency has taken a hit and depreciated more than 40 per cent against the American dollar and foreign currency reserves in the country have reduced by more than half

Bangladesh's economy has been suffering due to the ongoing protests and clashes. As of August 13, 2024, the country’s currency stands at 1 Taka equivalent to 0.71 Indian Rupees. The Central Bank of Bangladesh recently hiked the American dollar’s selling rate at the interbank level by Taka 2.85. While the rate earlier touched Taka 106 per US dollar, the new rate stands at Taka 108.85. 

This decision comes as the central bank tries to put in place an exchange rate system driven by the market to help reduce the pressures on the forex reserves of the nation. 

Economy's Condition

Since 2022, the domestic currency has taken a hit and depreciated more than 40 per cent against the American dollar, a report by The Indian Express noted. The foreign currency reserves in the country have reduced by more than half. As of 2023, Bangladesh secured a loan worth $4.7 billion from the International Monetary Fund and its overall external debt surpassed $100 billion by the end of the year. 

According to the latest data released by the Bangladesh Bureau of Statistics, the country’s inflation rate hit a record high of 11.66 per cent in July, not seen in 12 years. Food inflation also soared to 14.10 per cent, while the country recorded a non-food inflation rate of 9.68 per cent.

Will India Be Affected?

However, a report by S&P Global recently stated that the turmoil in Bangladesh is unlikely to impact India’s overall trade. The agency noted that India has built its position as a diversified exporter in global markets and its trade profile is not going to feel a major impact from the recent unrest in Bangladesh.

What Happened So Far?

Notably, the country became the witness to violent protests in the streets recently led by the Anti-Discrimination Student Movement. The protests started with demands for changes to the quota system in government jobs. After the government refused to engage in conversation with the protesters, the demands escalated to the resignation of Prime Minister Sheikh Hasina. 

This culminated in a breakdown in the government and PM Hasina fleeing the country to India last week. Since then, an interim government has been formed and Nobel laureate, Muhammad Yunus, has presided over it.

In the aftermath of the protests, there have been violent clashes in the country with the death toll crossing over 500. The infrastructure in the country has taken a major hit by the turmoil and the supply chain has been completely disrupted due to curfews and internet shutdowns implemented lately.