Bangladesh (Commonwealth Union)_ Countries are moving away from dollar trade to reduce their reliance on the US dollar as the reserve currency. Accordingly, Bangladesh has already initiated trade with India in Indian Rupees as a means to alleviate pressure on the requirement for US dollars. Experts and businesses believe that this move will save at least $2 billion annually, which can be utilized for other purposes. Additionally, a substantial amount of dollars can also be saved from the informal sector, as individuals traveling to India for various purposes will no longer need to spend dollars as a result of the introduction of dual currency cards.
According to a former governor of the Bangladesh Bank (BB), Bangladesh’s trade in Indian Rupees will commence with regional trade using an alternate currency, which will eventually include the Bangladeshi Taka. This approach will help reduce the strain on the ACU payment settlement, which currently takes place once every two months. However, this is just a small step, considering the substantial trade imbalance between Bangladesh and India.
According to Dr. Atiur, Bangladesh exports around $2 billion to India, while India exports nearly eight times that amount. He suggested that designated banks in Bangladesh could open accounts in Indian banks to receive export proceeds in Rupees, while Indian banks could open Taka accounts in Bangladesh to receive their export proceeds to a limited extent. The remaining payments will continue to be conducted in dollars.
Given the dominance of the dollar as the primary currency, trading in Indian Rupees will be only a partial and experimental measure. Dr. Atiur emphasized the importance of learning through practical experience and cautioned against complacency, even though this approach has the potential to establish a new method of conducting transactions using regional alternate currencies.
According to Abdul Matlub Ahmad, the President of the India-Bangladesh Chamber of Commerce and Industry (IBCCI), Bangladeshi traders currently incur an additional cost of 4-6 percent, which could be saved if transactions in Taka and Rupees are introduced. He also highlighted the uncertainty among businessmen about opening Letters of Credit (LCs) in dollars, as the value of the rupee against the dollar has frequently declined over the past year. However, there is greater stability in Taka-Rupee transactions, as the value of the Taka has not significantly decreased against the rupee.
Initially, Sonali Bank and Eastern Bank of Bangladesh, along with two banks in India, will open LCs in Rupees. The number of participating banks is expected to increase in the future, easing the process for traders. According to Ahmad, this opportunity will benefit small businessmen in particular, as many of them face challenges opening LCs due to the dollar crisis.
