** Both muscle politics and political activist teachers are jointly to be blamed for universities' shameful low ranking ** Buyers flock to Karwan Bazar market in the capital to buy hilsa as the government has imposed a 22-day ban on catching, selling, hoarding and transporting of hilsa from Friday across the country to protect safe spawning of the fish during its peak breeding period. NN photo ** Bangladesh's economy is in quite strong position: PM ** Dengue spreading fast ** Palm oil price down by Tk 8 per litre, sugar price up Tk 6 per kg ** Tangail road crash leaves six dead ** National grid failure Probe on to determine sabotage ** 35 people killed in Thailand mass shooting ** HC cannot pass order in a policy decision matter of the govt : SC rules ** Cricketer Al-Amin claims, he divorces his wife ** The committee must see if efficient people are placed in the power sector to avoid an outage ** Vehicles struggle to ply on Dhaka-Narayanganj Link Road on Wednesday, as rains caused waterlogging in the area. NN photo ** Army personnel working to restore road communication at Sajek union under Baghaichhari Upazila in Rangamati district on Wednesday as heavy rains triggered landslide in the area, disrupting vehicular movement on Sajek-Khagrachhari road. NN photo ** Initiative taken to amend the hundred-year old Railways Act ** Probe body starts work to find out reasons for national grid failure ** Bigo Apps loots Tk 108cr spreading obscenity in Bangladesh ** US announces $625m military aid for Ukraine ** Brunei Sultan likely to visit Dhaka on Oct 13-15 ** Teen stabbed to death at Gopalganj Durga Puja fair ** Country reports 549 new Covid cases, 2 deaths ** 25 dead as bus falls into gorge in India ** Nearly 4000 tourists trapped as heavy rain triggers landslide at Sajek ** Dollar rebounds as global market rally fades ** Govt made money in the name of generating electricity: BNP ** Child labour crushing dreams of Bangladesh children **

Trade settlement in local currencies with India is a good option

23 September 2022

Businesses in Bangladesh will not be able to use the Indian rupee in conducting trade with entities abroad as Bangladesh Bank has not enlisted the currency as a means of settling letters of credit (LCs). However, entrepreneurs said if trade between Bangladesh and India takes place in the local currencies, pressure from falling US dollar reserves and associated ongoing forex market volatility would be reduced to some extent. Bangladesh, which boasted of having $48 billion in reserves in August 2021, saw it go down to $37.13 billion as import bills surpassed exports and remittances.
India is the second largest source of imports for Bangladesh. Industrial raw materials, capital machinery, cotton, yarn, fabrics, and chemicals worth $16.19 billion were imported in fiscal year 2021-22. On the other hand, Bangladesh exported goods worth $2 billion to the neighbouring country. The issue of using local currencies came to the fore after the State Bank of India (SBI) issued a notice on August 24, saying it would allow LCs making use of the taka and rupee instead of the US dollar and other foreign currencies.
Bangladesh is categorised under high risk and under caution risk category as per our country risk model. The country is facing a shortage of foreign currency due to higher import bills and weakness of the taka against the US dollar in recent times. Under such a situation, the SBI has decided not to use the US dollar and other foreign currencies till further instructions.
Even if all the bilateral trade cannot be conducted in the taka and rupee, at least $2 billion worth of trade, which is equivalent to what Bangladesh exports, can be in local currencies. Experts of both countries can sit together to find a solution so that the whole of the bilateral trade can be transacted in the taka and rupee. Enabling a vibrant trade in the rupee and taka would require years but the BB can start the process from now.

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