The two countries launched a plan to reduce dependence on the US dollar in bilateral trade. Bangladesh hopes this will ease pressure on its foreign exchange reserves, which has led to considerable devaluation of its national currency in the past 18 months.
Dhaka (AsiaNews/Agencies) – Bangladesh and India today started settling bilateral trade in Indian rupees, allowing transactions in a local currency and thus reducing dependence on the US dollar.
In Dhaka, four banks – Sonali Bank, Eastern Bank of Bangladesh, the State Bank of India and ICICI Bank – handed over two export letters of credit for 28 million Indian rupees from two Bangladeshi companies, Tamim Agro and Shahjahan Mia, and two import letters of credit worth 12 million Indian rupees involving two Indian companies, Nita Company and Abdul Matlub Ahmad.
The Bank of Bangladesh and the Indian High Commission in Dhaka are behind the initiative.
Two-way trade between the two South Asian countries currently stands at US$ 16 billion. By using a local currency, the two can give local businesses some breathing space and allow them to open bank accounts and pay in rupees.
This is expected to reduce pressure on Bangladesh's foreign exchange reserves, which have been declining since external payments have continued to outpace export and remittance revenues.
As a result, Bangladesh’s taka has lost significantly over the past eighteen months.