Bangladesh, India Start Trading in Rupees

Dhaka, Bangladesh (July 11, 2023) – Today, Bangladesh and India launched official trading in rupees in an effort to reduce their dollar reliance. This action is viewed as a significant measure towards enhancing bilateral trade between the two nations.

Under the new arrangement, Bangladeshi exporters can receive export proceeds in rupees, and Indian importers can pay for imports in rupees. This will reduce both countries’ reliance on the US dollar, which has been under duress in recent months due to the Russia-Ukraine conflict.

Four banks from each country will participate in the initial segment of the rupee trading arrangement: Sonali Bank and Eastern Bank in Bangladesh, and State Bank of India and ICICI Bank in India. These institutions will establish “nostro accounts” in each other’s currency, enabling them to settle trade transactions in rupees.

The Bangladesh Bank and the Reserve Bank of India have stated that they will progressively expand the scope of the rupee trading arrangement to include additional banks and other financial transactions.

The introduction of rupee commerce between Bangladesh and India is an important development that could have a substantial effect on bilateral trade. It is anticipated to reduce the cost of commerce for both nations, and it may also contribute to an increase in trade volume.

This action is also viewed as an indication of the strengthening economic connections between Bangladesh and India. The two nations have a long history of trade, and they are currently working to expand their economic cooperation in several areas, including investment, infrastructure, and energy.

Quotes:

  • “This is a major step towards boosting bilateral trade between Bangladesh and India,” said Abul Kasem Khan, Governor of the Bangladesh Bank. “It will help to reduce the cost of trade for both countries, and it could also help to boost trade volume.”
  • “The launch of rupee trading is a sign of the growing economic ties between Bangladesh and India,” said Shaktikanta Das, Governor of the Reserve Bank of India. “We are committed to working with Bangladesh to further strengthen our economic cooperation.”

The introduction of rupee trading between Bangladesh and India is a positive development that could have many advantages for both nations. It is anticipated to lower trade costs, increase trade volume, and strengthen economic relations.

This action is also viewed as a means to reduce Bangladesh’s reliance on the US currency. Due to the Russia-Ukraine war, the US dollar has been under pressure in recent months, making it more expensive for Bangladesh to import products and services. By transacting in rupees, Bangladesh can reduce its dollar exposure and safeguard its foreign exchange reserves.

Bangladesh and India have taken a significant stride forward with the introduction of rupee trading. It is indicative of the strengthening economic ties between the two nations and could have a significant impact on bilateral trade.

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