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Business Insider Bangladesh

India-Bangladesh trade using rupee instead of US dollar may start soon

UNB || BusinessInsider

Published: 15:47, 1 April 2023  
India-Bangladesh trade using rupee instead of US dollar may start soon

Photo: Collected

Bangladesh could soon start trading with India using the rupee instead of the US dollar, a trial for which has been done by Bangladesh Bank recently.

The ministry of commerce has placed a written recommendation at the last cabinet meeting regarding the possibility and opportunity of using the rupee instead of the dollar.

Currently, Bangladesh exports goods to India worth around USD 2 billion.

“The use of the rupee will start with Bangladesh's $2 billion trade with India. Bangladesh Bank has almost finished all kinds of trials in this regard. Trading in rupee will be introduced in both countries only after bilateral decisions on some issues,” an executive director of Bangladesh Bank said.

Wishing anonymity, he said that banking systems in India and Bangladesh have to sign separate agreements on using the rupee.

Meanwhile, the India-Bangladesh Chamber of Commerce and Industry (IBCCI) has submitted the total trade account to the central bank in the form of a proposal. This initiative is being taken to overcome the existing dollar crisis, sources said.

Bangladesh Bank spokesperson Md Mezbaul Haque said that India-Bangladesh trade, using the rupee instead of the US dollar, is still in the experimental stage. Some issues still need to be settled.

“There are some bilateral issues that need to be resolved. Then the banks have to prepare. But there will be a positive decision in this regard,” he added.

In response to a question about whether there will be a fixed annual dollar quota for opening LCs, he said, LCs will be opened according to the needs of businessmen.

But the only source of rupees is from the export earnings of Bangladeshi goods in India.

“We are importing more from India than we export. This is why there is a trade deficit. As a result, the amount of rupee is also being considered,” Mezbaul said.

Currently, India is trading in rupees with Russia, Mauritius, Iran and Sri Lanka.

At the Bangladesh-India ministerial meeting on trade, held in the Indian capital New Delhi on December 22-23 last year, India proposed to introduce the rupee as a medium of trade for both countries.

Then, on the sidelines of the meeting of G20 Finance Ministers and Central Bank Governors held in Bengaluru, India on February 24-25, there was a discussion between the two countries about moving the dollar as an exchange currency.

There, Bangladesh Bank Governor Abdur Rauf Talukder and Reserve Bank of India Governor Shaktikanta Das discussed the possibility of such a system using the rupee instead of the US dollar.