Bangladesh and India have launched the settlement of bilateral trade in Indian rupees (INR), aiming to reduce their reliance on the US dollar. 

This step marks a shift towards settling transactions in local currencies and a departure from the over-dependence on the greenback.

During a ceremony held at Le Méridien Dhaka, four participating banks — Sonali Bank, Eastern Bank of Bangladesh, State Bank of India, and ICICI Bank — facilitated the exchange of two export letters of credit from Bangladeshi businesses Tamim Agro and Shahjahan Mia, worth a total of 28 million Indian rupees. 

Two import letters of credit amounting to 12 million Indian rupees, issued by Nita Company and Abdul Matlub Ahmad, were also exchanged.

Launching the settlement program aims to address a part of the approximately $16 billion two-way trade between the two nations. 

Reducing the reliance on the dollar and transacting in Indian rupees, the initiative aims to cut costs and save time in the growing trade relationship.

Importers are expected to benefit from the program, as they can open letters of credit in rupees instead of dollars. 

This move is also anticipated to alleviate pressure on Bangladesh’s foreign exchange reserves, which have declined due to the imbalance between external payments and receipts from exports and remittances.

The Bangladeshi Taka has experienced a significant depreciation over the past 18 months, and this trend continues. 

However, the shift towards trade settlement in Indian rupees will likely provide some relief and stability to the country’s currency.