- Sunday, April 20, 2025
Dhaka is struggling to pay for imported fuel because of shortage of dollars.
By: Shubham Ghosh
TWO banks in Bangladesh, including the biggest state-owned lender, have planned to begin trade transactions in the Indian rupee, officials said, as Dhaka looks to address its depleting foreign reserves, Reuters reported.
Till now, the South Asian nation has carried out trade transactions in dollars only.
State-owned Sonali Bank and Eastern Bank have set up “nostro” accounts in rupees with India’s State Bank of India and ICICI Bank, Reuters said citing officials from both banks.
Nostro account refers to an account that a bank holds in another bank abroad in the currency of that jurisdiction. Such accounts are in use for international trade and settle other foreign exchange transactions.
“This is just the beginning. More banks will join us in the coming days. It will ease pressure on the foreign reserves,” Afzal Karim, managing director (MD) of Sonali Bank, was quoted as saying by Reuters.
Ali Reza Iftekhar, MD of Eastern Bank, said the exchange rate mechanism will be decided on a cross-currency basis by individual banks and a formal declaration will be made next week.
“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,” he was quoted as saying.
After China, India is Bangladesh’s second-largest source of imports.
Dhaka is struggling to pay for imported fuel because of a shortage of dollars. Its reserves have gone down by more than a third since Russia’s invasion of Ukraine in February last year to stand at a seven-year low of $31.60 billion (£24.7 billion).
