2023-07-08 14:49:19
The Indian rupee strengthens.
Two Bangladeshi banks plan to launch commercial transactions denominated in Indian rupees, as the South Asian country seeks to increase its foreign exchange reserves and decrease its reliance on dollars.
Until now, Bangladesh has only transacted business in dollars. Is de-dollarization beginning in Asia?
The Indian rupee strengthens.
Indian rupee strengthens
On July 11, Eastern Bank, which has opened rupee accounts with the State Bank of India and ICICI Bank, announced its plan to operate in rupees. Sonali Bank, a state-owned lender in Bangladesh, also offers the same service.
One account ‘our’ refers to an account that a bank has abroad with another bank in the currency of that jurisdiction. Such accounts are used for international trade and to settle other currency transactions.
“This is just the beginning. More banks will join us in the coming days. It will ease the pressure on foreign exchange reserves.”Afzal Karim, managing director of Sonali Bank, told Archyde.com.
The exchange rate mechanism will be decided on a cross-currency basis by individual banks and a formal announcement will be made on July 11, said Ali Reza Iftekhar, managing director of Eastern Bank.
“The use of the Indian rupee in India-Bangladesh trade provides a convenient and cost-effective mechanism for conducting cross-border transactions, contributing to the strengthening of economic ties between the two nations,” Iftekhar said.
???? Bolivia, the first country in the region to adopt the Chinese Yuan.
India is the second largest source of imports for Bangladesh following China, with Dhaka’s exports to India worth $2 billion in the year to June 2022, while Bangladesh’s imports from India were $13.69 billion.
Bangladesh is struggling to pay for imported fuel due to a shortage of dollars. Its dollar reserves have shrunk by more than a third since Russia’s February 2022 invasion of Ukraine to stand at a seven-year low of $31.6 billion.
The value of the Bangladeshi taka currency fell by more than a sixth during the 12 months to May.
With contributions from international agencies.
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