A recent Bangladesh Bank (BB) report suggests that Bangladesh should focus on expanding export markets before fully embracing local-currency settlements in external trade. The study, “Trading in Local Currencies: Problems and Prospects for the SAARC Countries,” led by BB’s Executive Director (Research), notes that despite the initiation of trade settlements in Indian rupees (INR) in mid-2023, this approach has not yet gained significant traction. From July to December 2023, only 3.51 million rupees in transactions were recorded, far below the volume of bilateral trade. Bangladesh continues to face challenges, including a large trade deficit with India, high demand for US dollars, and limited rupee earnings. The report emphasizes that while trading in local currencies can enhance cooperation within the SAARC region, it requires regional initiatives, bilateral agreements, and private sector engagement. Key recommendations include improving trading efficiency, reducing currency conversion costs, and fostering exporter and importer education to promote local currency use. Additionally, it advises relaxing capital flow restrictions and reducing tariff and non-tariff barriers among member countries to establish a secure trade settlement system.
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