Bangladesh and India Launch Trade Transactions in Rupees to Reduce Dollar Dependence

Bangladesh and India Launch Trade Transactions in Rupees

• Bangladesh and India have initiated trade transactions in rupees, aiming to reduce reliance on the US dollar and strengthen regional currency and trade.
• This bilateral trade agreement marks a significant milestone for Bangladesh, moving beyond the US dollar for trade settlement with a foreign country.

Trade Settlement in Rupees: A Historic Step:

• Bangladesh Bank Governor Abdur Rouf Talukder describes the launch of trade settlement in rupees as the “first step in a great journey.”
• The move signifies the growth and economic cooperation between India and Bangladesh, fostering mutual benefits.

Reduced Transaction Costs and Dual Currency Card:

• The introduction of the Taka-Rupee dual currency card, expected to be launched from September, will further facilitate trade between the two countries.
• The dual currency card will help reduce transaction costs during trade with India, enhancing convenience for traders and strengthening economic ties.

Formalizing Trade in Rupees:

• While frontier trading has existed between Bangladesh and India in certain areas called “border huts,” formal trade will now be conducted in rupees.
• Initially, the trade will be transacted in rupees, with a gradual shift towards using the Bangladeshi currency, Taka, as the trade gap decreases.

Nostro Accounts and Market-Based Exchange Rate:

• Banks in both Bangladesh and India have been granted permission to open nostro accounts for foreign currency transactions.
• The exchange rate will be determined based on market demand, ensuring transparency and efficiency in the trade process.

Trade Figures and Economic Outlook:

• According to official data, Bangladesh’s exports to India amount to USD 2 billion, while imports from India are valued at USD 13.69 billion.
• Some economists express skepticism about the immediate benefits for Bangladesh due to the trade deficit. However, Governor Talukder emphasizes the broader impact on exporters and importers in both countries.

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