India reached out to several countries in the East that face a U.S. dollar shortfall to trade with the Indian Rupee. Bangladesh has accepted the offer and agreed to settle cross-border transactions with the Rupee and not the U.S. dollar. BRICS countries are also working to launch a new currency and end reliance on the USD.
Reports claimed that Bangladesh has also put forward its desire to make other countries accept their native currency, Taka. The development sidelines the dollar giving importance to native currencies in international trade. Therefore, the Indian Rupee and the Bangladeshi Taka could be used as currency to settle international trade and not the U.S. dollar.
The move could give a significant boost to local businesses that rely less on the USD, making it easier to initiate transactions. The neighboring countries will directly exchange imports and exports with native currency and end the reliance on the U.S. dollar.
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India & Bangladesh Ditch the U.S. Dollar For Trade
The development will boost regional trade and reduce business costs that come with the dollar. In addition, it would reduce the pressure of accumulating the dollar as reserves in both countries’ treasury. Developing nations are looking to promote bilateral and regional trade with neighbors to strengthen their local currencies.
“Many countries (BRICS) started moving to this payment system convergence allowing transactions in local currencies. Countries are doing this to promote bilateral or regional trade,” said the executive director for Bangladesh Bank Md. Mezbaul Haque. He added that both countries want to “Reduce the cost of business and increase the speed of transactions.”
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“India is a major trade partner of Bangladesh and Bangladesh imports a huge quantity of goods from India. Thus, such a decision will cut the cost of business, speed up transactions, and boost regional trading. We have scrutinized the proposal of introducing payments in Rupee offered by India and will allow the opening of an LC (Letter of Credit) in banks,” he said to media outlet Anadolu.