Bangladesh has allowed banks to maintain accounts in Chinese currency for overseas transactions to reduce dependency on the US dollar as part of the country’s efforts to preserve the dwindling foreign reserves, officials said here on Friday.
The move is expected to help reduce dependence on the US dollar in view of the growing inflation, hugely affecting essentials’ prices and fall of foreign currency reserves and widening gap between Bangladesh’s taka and US dollar, a Bangladesh Bank official told PTI.
“We have told the banks that they may use Chinese Yuan (or RMB) for overseas trades,” he said.
The central bank had issued a notification on Thursday asking authorised foreign exchange dealers in Bangladesh to follow the switch to tackle the price rise of the US currency and fall of foreign exchange reserves amid surging global inflation, the official said.
The banks so far were allowed to maintain foreign currency clearing accounts with the central bank in USD, Pound Sterling, Euro, the Japanese Yen, Canadian dollar, Australian dollar and Swiss Franc.
The Bangladesh Bank’s latest decision came as major chamber bodies like Metropolitan Chamber of Commerce and Industries (MCCI) were insisting on using a second currency other than the US dollar for international trading.
The MCCI suggested the Chinese Yuan, RMB (Renminbi), as the second international currency instead of the dollar, as Bangladesh imported most from China, which is also the country’s largest trade partner, and also for the reason that China recently introduced a cross-border interbank payment system with RMB as an alternative trading currency.
The central bank official said the decision is a “contingency measure” to facilitate Bangladesh’s foreign trade covering both export and import.
Earlier in 2018 also, the central bank of Bangladesh had allowed authorised dealers to maintain a foreign currency clearing account with it in the Chinese Yuan on the same ground.
Bangladesh currency’s exchange rate with the RMB abruptly widened this month as Taka 1 now equals 0.067 RMB while the ratio was 0.71 in August.