India, Bangladesh chuck the dollar, to settle trade in Rupee-Taka

New Delhi: India and Bangladesh are soon expected to do away with dollar as the official currency and carry out bilateral trade in Rupee and Taka. Officials from both the neighbouring nations held talks on the issue on the sidelines of the recently held G20 Finance Ministers and Central Bank Governors meeting in Bengaluru.

According to a report by The Daily Star, India’s central bank – Reserve Bank of India’s (RBI) – Governor, Shaktikanta Das, held a discussion with Bangladesh Bank Governor Abdur Rouf Talukder on the possibility of having an arrangement where transactions would not be pegged to the dollar.

The RBI Governor is said to be on board with the idea of dual currency and the central bank of both the countries would be working on modalities.

It is said to be rolled out on a test basis soon, the report said.

How trade in Rupee-Taka benefit India and Bangladesh?

Trade in Indian Rupee and Taka will bring down the cost of settlement and lower conversion rate, making it beneficial for traders of both the countries.

Currently, transactions between both these nations are carried out in US dollar, which is then converted to rupee or taka. This leaves both the sides with some conversion losses.

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Last week, Bangladesh Prime Minister Sheikh Hasina chaired National Economic Council meet, the country’s central bank governor, Talukder, said trade settlement in rupee-taka would reduce the pressure on foreign currency given the large volume of payments to India.

Bangladesh government also presented a report in which it stated that as per its estimate, around $2 billion is spend by Bangladeshi nationals on treatment, tourism and education in India.

Also, India is among the top three import destinations for Bangladesh.

Talukdar further said there would be a dual currency card for Bangladeshis visiting India. Citizens can load the card with Indian rupee before travelling and vice versa. The exchange rate would be derived from the two currencies and not be worked backwards from the exchange rate of the dollar.

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For businessmen and traders in India, this arrangement would help get their bills cleared faster as no dollars would be involved.

“The pressure on reserves has come down a lot. The import bills have come down because of the measures taken. It is now possible to meet the import bills with the export proceeds and remittance inflows. But there are other dollar outflows that need to come down,” Talukdar said.

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