Two banks in Bangladesh are planning to trade in the Indian currency, including the country’s largest state-owned bank.
According to the British news agency Reuters, Bangladesh is taking steps to increase its foreign exchange reserves. Until now, Bangladesh has traded only in dollars.
Officials of the government’s Sonali Bank and Eastern Bank say the two banks have opened ‘Nostro’ accounts with the Bank of India and ICICI Bank in Rs.
Nostro account refers to an account that a bank maintains with another bank abroad in the currency of its jurisdiction. Such accounts are used for international trade and other foreign exchange transactions.
Afzal Karim, managing director of Sonali Bank, told Reuters that this is just the beginning. More banks will join us in the coming days. This will reduce the pressure on foreign exchange reserves.
Managing Director of Eastern Bank, Ali Raza Iftikhar, says, “The exchange rate mechanism will be decided by individual banks on the basis of cross-currency, and it will be formally announced on July 11.”
After China, India is Bangladesh’s second largest source of imports, as of June 2022, Bangladesh’s exports to India were $2 billion, while its imports from India were $13.69 billion.
Bangladesh is struggling to pay for imported fuel due to a shortage of dollars.
Since Russia’s invasion of Ukraine in February 2022, Bangladesh’s dollar reserves have fallen by a third to $31.6 billion, the lowest level in seven years.
During the last 12 months, Bangladesh’s currency, the Taka, has recorded a significant depreciation.