Monday, 2 October, 2023

Trade in Rupee with India will start a new era of trade in different currencies: Experts

Bangladesh will start trade with India in Rupees in order to reduce stress on the US dollar requirements from Tuesday .

Experts and businesses opined that it will save $2 billion dollars at least annually, which Bangladesh may use for other purposes.

Besides, a significant portion of the dollar will be saved from the informal sector, which was spent by travelers to India for different purposes, following another initiative of dual currency cards, they said.

A former governor of Bangladesh Bank (BB) told UNB that Bangladesh's trade in Indian Rupees will start in regional trade with an alternate currency which will also incorporate Bangladesh Taka subsequently.

This will help take some pressure off the ACU payment settlement which takes place every two months, he said.

However, this will be only a small step as there is a huge imbalance in Indo-Bangladesh trade, Dr Atiur said.

“Bangladesh exports about $2 billion to India against India exporting nearly eight times of that amount. So, our designated banks can open accounts in Indian designated banks and put export proceeds in Rupees,” he opined.

Similarly, Indian banks can open Taka accounts in Bangladesh banks to put their export proceeds in Taka to a limited extent. The rest of the payments will continue conventionally in dollars, he said.

The dollar being the dominant currency, the trading in Indian Rupee will be only partial and experimental.

“We will learn by doing. One should not be complacent about it, although this can be a new way of transactions in regional alternate currencies,” Dr Atiur added.

President of India-Bangladesh Chamber of Commerce and Industry (IBCCI) Abdul Matlub Ahmad told UNB that Bangladeshi traders incur an additional cost of 4-6 percent that will be saved if taka-rupee transactions are started.

Again, the businessmen are uncertain to open LCs in dollars. This is because the value of the rupee against the dollar has fallen frequently over the past year, Ahmad said.

But there is no such uncertainty in taka-rupee transactions. Because the value of taka has not decreased much against the rupee, he said.

At first Sonali Bank and Eastern Bank of Bangladesh and two banks of India will open LCs in Rupees.

The number of banks will increase in the coming days. As a result, traders will not have much problem. Anyone can take this opportunity. But the small businessmen will benefit more from money to rupees transactions, the business leader said.

Because many small businessmen are unable to open LCs due to the dollar crisis, the Rupees trade will give priority to small traders, Ahmad said.