Businessmen are not interested in trade on rupee with India

Rabiul Haque: In the bilateral trade of Bangladesh with India, there are two sides of profit and loss of transaction in Indian currency Rupee. Businessmen of the two countries can open import-export LCs in rupees instead of dollars. But the businessmen of Bangladesh are not interested in this as the rupee does not move to other countries except India. On the other hand, there is not much interest among Indian businessmen so far. That being said, both countries are now looking for entrepreneurs to open import-export LCs in Rupee. For this purpose, four banks of the two countries are working. Banks have also set up special desks to help entrepreneurs.
According to sources, when the transaction in rupees between the two countries was officially inaugurated on July 11, the two business firms opened LCs worth Rs 2.8 million on that day. Out of this, Tamim Agro has opened an export LC of Rs 1.6 crore and Nita Company has opened an import LC of Rs 1.2 crore. Meanwhile, Nita Company’s products arrived at Benapole port on Wednesday. After that no more LC was opened. However, it is reported that soon some more companies will open export LCs for Rupee.
This is the first time in the history of Bangladesh that there is an opportunity to open LC in regional currency outside of any international currency. Until now, Bangladesh is opening import-export LCs for foreign trade in US dollars. For some time after independence, foreign trade was done in the pound, the currency of the United Kingdom. From July 11, only limited transactions with India in rupees have started. While Bangladesh trades with India in Rupees, India will not trade in Bangladeshi currency taka. As a result, there are pros and cons to this type of transaction.
On the plus side – direct LC can be opened in banks of two countries for rupee. Earlier money was converted into dollars, then LC was opened in India and converted into rupees. As a result, it took more time. Fees or commissions had to be paid more. Besides, the transaction was settled in the United States. Now transactions will be done directly in rupee. The transaction will be settled between the two countries. As a result, fees, charges, commissions and interest will be reduced, saving time and cost. In this case, 4 to 6 percent money will be saved due to commission. Time will also be saved as the transaction will be settled between the central banks of the two countries. It will reduce dependence on dollar. The rising dollar will play a role in reducing the price pressure to some extent. In foreign trade, the single dependence of the dollar will be reduced and transactions will be multifaceted. Its internationalization will increase as transactions are denominated in rupees. To increase transactions in rupees, Bangladesh’s income in rupees should be increased. For this reason, the export from Bangladesh to India should be increased. Then the transaction will stabilize in Rs. But there is no initiative to increase exports from Bangladesh to India.
Disadvantages include, transactions in rupees but not in taka. As a result, money will not be strong. Rather, the Indian currency, the rupee, will strengthen. India’s imports are 8 and a half times more than Bangladesh’s exports. As a result, there will not be enough rupees to open the LC. Then to collect additional rupees, you have to take a loan from India in that country’s currency or you have to buy rupees with dollars from the reserve. If you take a loan, the interest rate will be higher on a loan in rupees than in dollars. If you buy rupees with dollars again, there will be pressure on the dollar. A huge trade deficit will be a major obstacle in maintaining the trade balance between the two countries. A fall in the rupee or a rise in interest rates will increase the cost of borrowing.
The International Monetary Fund (IMF) has so far recognized the currencies of 5 countries as stable currencies. These include the US dollar, the British pound, the European Union euro, the Japanese yen and the Chinese currency yuan. It does not accept the Indian currency rupee. As a result, there is risk in this currency.
According to sources, the rupee has depreciated by around 26 percent against the dollar, while the rupee has depreciated by around 32 percent. That is, the value of the rupee has depreciated more than the rupee against the dollar.
Bangladesh imports about $1,400 million worth of goods from India annually. In Indian currency, the amount of which is 1 lakh 9 thousand crore rupees. Bangladesh exports goods worth $1.5 billion to India. Its amount in the currency of that country is Rs 12,000 crore. As a result, there is a huge gap between import and export. Bangladesh does not have enough rupees to meet the import liability of such a huge amount. Due to this, it was decided that for the time being, the amount of exports to India will be in rupee. Goods will be imported from India with that rupee. There are problems with that too. Because, exporters who export to India but also import goods from other countries, will not open LC for rupee. Only exports to India and imports from India, only they will be encouraged to trade in rupee. Such entrepreneurs are rare. Because entrepreneurs import and export with different countries. As a result, they need dollars.
Also, if exports are imported with rupees, the tourists from Bangladesh who are going to India for medical treatment will face a shortage of rupees. They will be forced to take dollars. This will increase the pressure on the dollar.
In this context, the Vice President of Bangladesh Manufacturers and Exporters Association Shahidullah Azim said that most of the exports to India are clothes. The country will get benefits if it imports raw materials from the country with the income of rupee. But import of raw material from third country will not get benefits. To increase trade in rupees, exports from Bangladesh to India should be increased. There is no alternative. Only then will Bangladesh benefit.
In this context, many people have raised questions about the extent to which India’s trade with Bangladesh will progress. Because Bangladesh’s huge trade deficit with India will be a major obstacle in this regard. Bangladesh will face a crisis of rupees. Interest rate will be one of the obstacles to take a loan from India in rupees to meet this crisis.