Bangladesh, India launch trade in Indian rupee

Bangladesh and India launched the much-hyped settlement of bilateral trade in Indian rupee (INR) at an event at Le Meridien Dhaka on Tuesday.

Bangladesh Bank Governor Abdur Rouf Talukder and High Commissioner of India in Bangladesh Pranay Verma were present, among others, at the launching event, according to local news portals.

At the event, the Bangladesh Bank governor announced to introduce dual currency Taka-Rupee card in September this year.

Taka-Rupee card will facilitate travellers’ payments in Bangladesh as well as in India.

According to a report published by The Financial Express (FE), the bilateral move has a precedent as China has long before mooted the cross-border interbank payment system (CIPS) in what is coined as 'de-dollarisation' in economic parlance in the wake of the global trading-currency crunch.

This matter of the Indian rupee (INR) and Chinese RMB in terms of cross-border transactions came into the limelight after Bangladesh's current-account deficit started widening and the foreign-exchange reserves depleting fast from the first quarter of the last fiscal year (2022-23).

However, there is little possibility of trade transactions on the day of the launch of the alternative system.

Before the launch of the settlement, EBL managing director and CEO Ali Reza Iftikhar told FE that traders may open LCs soon after deals with their Indian counterparts.

Ali Reza Iftekhar told another media that the taka would later be added to the new trade system.

People familiar with the development told the FE that the exchange rate would be determined by the market taking the dollar as a reference rate.

One state-owned bank and one private bank from each country have been selected for initial trade transactions under the new arrangement.

The state-owned Sonali Bank and the private Eastern Bank from Bangladesh side have been chosen for the transactions. These two Bangladeshi banks have opened nostro accounts, or accounts that a bank holds in a foreign currency at another bank, at the Indian banks.

In India, the State Bank of India (SBI) and ICICI Bank (ICBK) will facilitate the two-nation export-import dealings sans the overheated US currency.