Dhaka: The Business Standard, a news outlet based in Bangladesh, reported this week that India and Bangladesh are moving away from using the US dollar in their bilateral trade.

The report claims that the two nations have agreed to have some trade transactions conducted in their respective national currencies, the rupee and the taka. The move has reportedly been discussed between New Delhi and Dhaka for months.

The news source noted that they do not intend to completely abandon the dollar in trade. It is anticipated that Bangladeshi exports to India, which totaled about $2 billion in 2022, will completely switch to rupees and takas, and that Indian exports to Bangladesh, which totaled about $2 billion (out of about $13.69 billion as of the previous fiscal year), will be paid for in rupees. The remainder will continue to be paid in dollars, according to the news source.

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Two Bangladeshi banks, Sonali Bank and Eastern Bank, will open accounts with two Indian lenders, the State Bank of India (SBI) and ICICI Bank, and vice versa, to facilitate the transactions.

According to Sonali Bank's CEO and managing director, Afzal Karim, additional banks from both nations will gradually join the process. He pointed out that using domestic currencies instead of dollars in bilateral trade will relieve pressure on each nation's holdings of the US currency.

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According to Abdul Matlub Ahmad, the president of the Bangladesh-India Chamber of Commerce and Industry, who was quoted in the article, there are still some formal problems when switching from the US dollar to domestic currencies in trade.

However, he pointed out that businesses have been urging the central banks of the two countries to permit the switch for some time and that they are happy about the decision.

"The required steps are being followed. However, it might take several months before [taka and rupee transactions] begin," Matlub Ahmad added.

India unveiled its new Foreign Trade Policy for 2023 earlier this month, with a focus on moving away from the dollar and increasing the use of the rupee in international trade.

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Additionally, the nation recently decided to switch to rupee-based payment systems for Malaysian trade and imports of Iranian crude. Currently, India has rupee trade agreements with 18 nations, including Russia.