India asks exporters to trade with Bangladesh in rupee_ taka
Top lender State Bank of India has asked exporters to avoid settling deals with Bangladesh in the dollar and other major currencies as it looks to curb exposure to Dhaka's falling reserves_ according to an internal document and a source.
Bangladesh's 416 billion US dollar economy is battling rising prices of energy and food as the Russia-Ukraine conflict widens its current account deficit_ and dwindling foreign exchange forces it to turn to global lenders such as the International Monetary Fund (IMF).
'The country is facing a shortage of foreign currency due to higher import bills and weaknesses of Bangladeshi taka against dollar in recent times_' the SBI said in an August 24 letter sent to its branches.
The decision not to increase exposure to the dollar and other foreign currencies in relation to Bangladesh stemmed from the current economic situation and the neighbouring countries shortage of foreign currency_ the bank said in its circular.
'However exposure in Indian rupee (INR) and taka will continue_' it added.
Bangladesh's foreign exchange reserves declined to 37 billion dollar by Friday from 48 billion dollar a year earlier.
Finance ministry officials have said Bangladesh is seeking a 4.5 billion dollar loan from the IMF_ in excess of its maximum entitlement of 1 billion dollar under the IMF Resilience and Sustainability Trust.
The island nation of Sri Lanka is grappling with a financial crisis as its central bank reserves stand at just 1.7 billion dollar at a time of galloping inflation and severe shortages of food and fuel that sparked protests and a change of government.
And Pakistan's central bank reserves of 8.6 billion dollar are sufficient for just about a month of imports.
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