Muhith agrees to common trade currency (Indian Rupee) for India-BD trade

[CaPtAiN_pLaNeT]

Abdur Rahim Harmachi, from New Delhi

Muhith agrees to common trade currency - bdnews24.com

Published: 2013-05-03 18:32:20.0 Updated: 2013-05-03 18:33:06.0

Finance Minister Abul Maal Abdul Muhith has agreed to the proposal of the Indian businesses for use of a common currency in trade between the two neighbours.

He told a discussion in New Delhi on Friday: “Use of a single currency is possible at least in India-Bangladesh trade, though it is not possible among the eight SAARC countries.”

The Confederation of Indian Industries (CII) former President Shekhar Datta proposed use of the India currency, Rupee, in bilateral trade to boost business between the two countries.

He said: “Bangladesh Taka and India Rupee have been fluctuating against the US dollars for quite some time. India and Bangladesh are being affected by this instability. In such a situation the two countries can introduce Indian currency-based trade. Both the countries will benefit from it.”

He sought cooperation from the Muhith and the central bank Governor to this end.

Though Muhith agreed to the at the meeting, he did not say anything about what be the currency will be.

The Finance Minister urged the business communities of the two countries to start work to that end.

He pointed out that the use of a single currency among SAARC countries was proposed at a meeting of the finance ministers in 1998 in Pakistan and added that the then Pakistani Commerce Minister had taken a strong position against it, saying it was not possible.

“But a young businessman had said at that meeting introduction of a common currency is possible among the SAARC countries to the surprise of everyone and all of us will benefit from it,” he added.

“The time has come. We can introduce it. It’s not impossible. Though not possible among the eight SAARC countries, we can introduce a common currency between the two countries.”

He observed that intra-regional trade was not at all good. “We can learn from the recent global recession... which has not had any impact on China, Malaysia and Vietnam as the intra-regional trade is consolidated in the ASEAN.”

Bangladesh has a $ 4 billion trade deficit with India.

At the discussion held at CII headquarters, Datta urged India and Bangladesh to work together to raise investment, expand border trade and create skilled manpower in the two countries.

The CII organised the discussion in honour of the Bangladesh delegation attending the four-day 46th annual general meeting of the Asian Development Bank held in New Delhi.

At the discussion, he urged the Indian entrepreneurs to invest in Bangladesh.

Bangladesh Bank Governor Atiur Rahman, India-Bangladesh Chamber of Commerce and Industry President Abdul Matlub Ahmad and Bangladesh Acting High Commission in New Delhi Mahbub Hassan Saleh were present at the meeting.

 

[Skallagrim]

Not bad apparently..What are the possible disadvantages?

 

[livingdead]

Not bad apparently..What are the possible disadvantages?

Now most of trade is, you buying from us. Instead of buying in dollar, buy in rupee. Its good for you (keeps yor reserve), and good for us (less price fluctuation in rupees).

@Captain Planet, can you tell us why it is a bad thing.

 

[LaBong]

*crossing finger for conspiracy theories*

 

[fastbreeder]

chan se jo toothe koi sapna.. jag soona soona lage ..

 

[the just]

Bad idea.it will give India added advantage. Between rupee and taka there is less devaluation. But buying dollar with taka and then convert to rupee will give this morons less in terms of volume. But economically it will be good for us.we will not lose money in converting dollars to rupee as we do now.

 

[eastwatch]

Euro type of currency will be better for the entire SAARC region. But, SAARC is almost dead. Pakistan is negative. SL is now being strangled by the Tamils living in west by the instigation of India. So, very little prospect for a common SAARC currency.

But, an Indian Rupee-based trade will not serve the purpose. The balance of trade will certainly be paid either in gold or in dollar. So, can someone tell me how a Rupee based transaction can be worked out when trade balance is heavily in favor of India?

 

[Sugarcane]

Now most of trade is, you buying from us. Instead of buying in dollar, buy in rupee. Its good for you (keeps yor reserve), and good for us (less price fluctuation in rupees).

@Captain Planet, can you tell us why it is a bad thing.

From where they will bring INR???

 

[livingdead]

From where they will bring INR???

good question. Did not think through..

 

[neehar]

Euro type of currency will be better for the entire SAARC region. But, SAARC is almost dead. Pakistan is negative. SL is now being strangled by the Tamils living in west by the instigation of India. So, very little prospect for a common SAARC currency.

But, an Indian Rupee-based trade will not serve the purpose. The balance of trade will certainly be paid either in gold or in dollar. So, can someone tell me how a Rupee based transaction can be worked out when trade balance is heavily in favor of India?

gap between taka and rupee is smaller.so it would be good for both the countries inorder to trade in a common curreny than both to buy us dollars and trade with them..yes its an advantage to india as our rupee strengthens but it is also an advantage to bangladesh to buy rupees than dollars..further the risk of printing additional money for bangladesh required to sell to india is high as its requirement is large and if anything goes wrong infaltion in bangladesh grows by leaps and bounds..and risk to india to print rupee is less as its a far larger economy and the additional money printed would be smaller compared to our economy.so if at all anything goes wrong then the inflation rise in india is easy to control than in bangladesh.hence the rupee

From where they will bring INR???

RBI prints it if necessary..but theres something called CRR (cash reserve ratio) its the amount of money kept with RBI its 4% now..decreasing it would infuse additional money in to the system..it does it according to the local inflationary trends and demand for rupee..so when the demand arises .RBI just decreases it

 

[Skallagrim]

Now most of trade is, you buying from us. Instead of buying in dollar, buy in rupee. Its good for you (keeps yor reserve), and good for us (less price fluctuation in rupees).

@Captain Planet, can you tell us why it is a bad thing.

I don't think it would affect reserves in any ways. We'd accept INR but spend all of it plus USD eight times its value (USD 0.5 billion export vs USD 4.5 billion import) on import from India.

Now we import products from India worth 9 USD and gain 1 USD from export to India. That is net transfer of USD from BD to IND is 8 USD. If we accept INR then instead of gaining 1 USD from export we would get equivalent INR say x. Then while importing products worth 9 USD we would give you 1 USD = x INR plus 8 USD, resulting in the same amount of net USD transfer.

 

[livingdead]

I don't think it would affect reserves in any ways. We'd accept INR but spend all of it plus USD eight times its value (USD 0.5 billion export vs USD 4.5 billion import) on import from India.

Now we import products from India worth 9 USD and gain 1 USD from export to India. That is net transfer of USD from BD to IND is 8 USD. If we accept INR then instead of gaining 1 USD from export we would get equivalent INR say x. Then while importing products worth 9 USD we would give you 1 USD = x INR plus 8 USD, resulting in the same amount of net USD transfer.

yeah.. @LoveIcon was pointing at same thing I guess. thanks for explanation.

 

[Sheikh Shakib Ahmed]

Bangladeshis must protest that...

 

[Skallagrim]

Another point is INR would appreciate more over BDT because of the increased demand of INR.

 

[Rajput_Pakistani]

Another step towards Bangladeshi colonization by India..