The head of Sonali Bank Limited, Md. Afzal Karim, stated that “Bilateral trade with India in taka and INR will reduce pressure on the US dollar.” As Bangladesh dumps US currency and becomes the 19th country to trade with India with rupees, both nations stand to gain from this.
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Bangladesh has become the 19th nation to settle bi-lateral trade with India in Indian rupees. Both the countries were in talks for months to give up dollar and use their local currencies for clearing transactions.
To initiate settling cross-border trade with India, two of the Bangladesh’s banks — Sonali Bank and Eastern Bank Limited (EBL) — will open vostro accounts in two Indian lenders — State Bank of India (SBI) and ICICI Bank.
Similar accounts will be opened by these two Indian banks in the two Bangladeshi banks.
The transaction between the two countries will take place in taka-rupees without the inclusion of any third currency.
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Trade in INR-Taka will reduce pressure
“Bilateral trade with India in taka and INR will reduce pressure on the US dollar. Both countries will benefit from this,” a report by The Business Standard, Dhaka, quoted Md Afzal Karim, CEO and managing director of Sonali Bank Limited, as saying.
A delegation of India’s central bank – Reserve Bank of India (RBI) – and SBI visited Bangladesh’s capital Dhaka in April to discuss and finalise settling trade in INR and taka.
Treasury Secretary Janet Yellen warned in a quote to CNN that the US dollar may lose its dominance if nations are sanctioned.