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

[Aka123]

Bangladesh is not in position to print BDT to meet demand i guess bilateral trade between both is about $5bl which is heavily in favor of India

ok........

 

[illusion8]

Bangladesh is not in position to print BDT to meet demand i guess bilateral trade between both is about $5bl which is heavily in favor of India



We love to help our brothers, problem?

Of course, why would you have a problem with it?

 

[LaBong]

Lets say if taka is used instead of Indian rupee, what can be the possible advantages and disadvantages for both India and Bangladesh?
Can anyone share some points on this.

Since India enjoys trade surplus, ie India sells more goods to bd, using rupee is more logical, because bd can use the same rupee which was paid by India to import Indian goods thus bypassing dollar while utilising it's rupee reserve fully.

If taka is used, then what's India gonna do with all that taka since only a fraction of it will be spent on paying bd.

Bypassing dollar is generally a good idea because of many reasons, the illegal trade between bd and India which is almost 1 billion in worth is fully carried out using rupee and taka without any issues.

 

[asad71]

Tell me why on earth will this old fart Ma'al make such a commitment without studies / discussions at home? Through this mechanism India will find it convenient to dump her consumer goods in BD. In BD people normally consider anything Indian substandard or phoney - not without reason.

 

[INDIAISM]

Let us bear the risk.. just dont worry about it..

Why not you are most welcome just go for it,....And Believe me if you go with this then within 10 to 15 years fate of BDT and Bangladeshi Economy will be in our hand as we will be having stock of around 31200 Crore BDT in our hand.....With that stock of cash India at any time can increase inflation in your country or can even devalue your currency....

 

[HIMEL@BD]

It would not be completely different.But it will certainly reduce the amount of dollars used in previous method. But it will favor India as trade is in their favor.

 

[the just]

Why not you are most welcome just go for it,....And Believe me if you go with this then within 10 to 15 years fate of BDT and Bangladeshi Economy will be in our hand as we will be having stock of around 31200 Crore BDT in our hand.....With that stock of cash India at any time can increase inflation in your country or can even devalue your currency....

This is the reason why BD should not even consider this preposterous idea about a common currency deal.The morons are waiting for the kill.

 

[Lone]

I don't know who is the biggest idiot and threat to Bangladesh right now, Hasina or this Abul mal muhith??

 

[gslv mk3]

INR is close to junk and its unreasonable to ask anybody to trade with INR.

Much better than Bangladeshi Taka
1 US Dollar equals
78.15 Bangladeshi Taka

Tell me why on earth will this old fart Ma'al make such a commitment without studies / discussions at home? Through this mechanism India will find it convenient to dump her consumer goods in BD. In BD people normally consider anything Indian substandard or phoney - not without reason.

OMG high tech bangladeshis....Bangladesh is the most industrialised and developed country in south Asia

 

[Anony]

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.

Sorry to say dude, but I doubt you understand economics.
Look let's say today both INR and Takka is at 54 per USD. So if the trade deficit increases for BD, then INR will become comparatively stronger or Takka may slip even. Let's Takka slips to 56 USD. Thus in terms of Takka, BD has to pay 2 Takka more for each USD of trade deficit. If INR becomes the common currency, then this equation will nor arise this way.

This can have negative impact if Trade deficit increases in favour of Bangladesh, which don't seem a probability any time in immediate future.


Tried my best to explain in simplest term without bringing any economic funda:

 

[TopCat]

Why not you are most welcome just go for it,....And Believe me if you go with this then within 10 to 15 years fate of BDT and Bangladeshi Economy will be in our hand as we will be having stock of around 31200 Crore BDT in our hand.....With that stock of cash India at any time can increase inflation in your country or can even devalue your currency....

You are more than welcome to hold our currency.
You are not direct BD consumer or bank who could influence inflation. The only thing you can do is to increase the import from BD and the best way to reduce the trade gap.

 

[rubyjackass]

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.

BD's rupee reserves are not just from trade. Look at the investment Indian companies are making in BD. If all that(definitely in the order of bil of $) came in rupees, you will gain the exchange value. In the worst case, if Bangladesh cannot convert dollars into rupees, India obviously won't reject dollars. This is the best time for such a common currency agreement. Once India's investments in BD slow down, there will be no point.

It will only strengthen INR and further devalue TAKA. Given the current trade balance is hugely on indias side, we are going to lose more. How on earth this moronic finance minister and pm is going to approve this? It can only happen when the trade is more balanced and also TRUST is there.

Genius!! It will stop TAKA from devaluation against Dollar. Where did you study?
Besides, if BD falls short of rupees, they can always pay in dollars. Noone rejects dollars.

 

[Aka123]

Rather than fighting can the Bangladeshi guys suggest another possible option?

1. I hope no one will say 'lets stop trade'
2. Euro type common currency for SAARC is not an option, it's hypothesis which is not feasible.

If BD doesn't agree to using INR we will have to continue trade with USD.

 

[Skallagrim]

Sorry to say dude, but I doubt you understand economics.
Look let's say today both INR and Takka is at 54 per USD. So if the trade deficit increases for BD, then INR will become comparatively stronger or Takka may slip even. Let's Takka slips to 56 USD. Thus in terms of Takka, BD has to pay 2 Takka more for each USD of trade deficit. If INR becomes the common currency, then this equation will nor arise this way.

This can have negative impact if Trade deficit increases in favour of Bangladesh, which don't seem a probability any time in immediate future.


Tried my best to explain in simplest term without bringing any economic funda:

You seem to be oblivious/ignorant of the fact that accepting INR as common trade currency would strengthen it more against BDT. So for each INR we'd have to spend more BDT. The post of mine that you quoted was a reply to HinduGuy who perhaps momentarily thought that we'd always have a ready source of INR to spend on imports from India.

 

[rubyjackass]

You seem to be oblivious/ignorant of the fact that accepting INR as common trade currency would strengthen it more against BDT. So for each INR we'd have to spend more BDT. The post of mine that you quoted was a reply to HinduGuy who perhaps momentarily thought that we'd always have a ready source of INR to spend on imports from India.

Wrong. To the extent of rupess BD earns with exports to India it will pay to India directly without buying dollars with them, which means you will save on exchange rate(no need to convert TAKA to dollars) there. INR will not strengthen against TAKA. Both INR and TAKA will strengthen against dollar. The trade gap between India and BD can be paid with dollars like they do now.