The bank said in a statement that the currency devaluation would benefit exporters and boost tourism, which have both plunged since a 2006 coup led by Bainimarama.
The move comes a day after Fiji imposed exchange controls in a bid to prevent capital flight.
Reddy called on Fijians to endure the burden of soaring inflation that was expected to occur in the next year "so that our economy can recover quickly".
"It was quite clear that all they wanted was to force us to go into elections which we didn't want under the old system"
Commodore Frank Bainimarama, Fiji PM
The tourism and sugar export-dependent economy has stalled since the coup and Fiji's international credit rating was downgraded last month from stable to negative.
Fiji, already ostracised following Bainimarama's power grab in 2006, was plunged deeper into turmoil last week when he tightened his grip following an appeal court ruling that declared the government he appointed illegal.
A day after the court ruling, Ratu Josefa Iloilo, Fiji's president, scrapped the constitution to bypass the appeal court ruling and sacked all judges before reinstating Bainimarama and his cabinet to office for another five years.
Iloilo was himself restored to the presidency in 2007 by Bainimarama after the military chief briefly took on executive powers following the coup. Iloilo later endorsed the coup.
The appeals court was comprised of expatriate Australian judges - a common practice in South Pacific countries where senior lawyers are in short supply - who Bainimarama accused of having made their decision "long before they got to Fiji".
"It was quite clear that all they wanted was to force us to go into elections which we didn't want under the old system," Bainimarama told New Zealand's National Radio on Wednesday, in the first interview with foreign media since last week's crisis.
Bainimarama has since imposed severe restrictions on local media and expelled all foreign journalists from the country, blaming free speech for causing instability in the country.
Under a 30-day state of emergency, the media in Fiji are not allowed to carry stories critical of the government, with official censors in newsrooms to vet stories and the threat of being shut down if they breach regulations.
Bainimarama insists his rule is legitimate, and that he will hold fresh elections by 2014 after rewriting the constitution and electoral laws to remove what he says is racial discrimination against a large ethnic Indian minority.
In December 2006, Bainimarama toppled the elected government of Laisenia Qarase, accusing it of corruption and of unfairly favouring the indigenous Fijian majority over minority ethnic Indians.
The coup – the fourth in two decades –was condemned by the international community, with the United States, European Union, Australia and New Zealand introducing targeted sanctions against the new government.
Critics say the latest upheaval will leave Fiji even more isolated, with Australia and New Zealand both threatening it with fresh trade sanctions.
Stephen Smith, the Australian foreign minister, has said that it is almost inevitable that Fiji would be expelled from the Commonwealth group of nations and the South Pacific's trade and diplomatic bloc because of the latest political turmoil.