India and Bangladesh have agreed to exclusively employ the rupee for their bilateral trade, strategically aiming to amplify commercial activities while reducing reliance on the US dollar. 

This announcement, made on Sunday, allows businesses to invoice and finalize trade transactions using rupees, promising streamlined processes, lower transaction costs, and smoother interactions between Indian and Bangladeshi enterprises. 

Sanjay Budhia, Chair of the National Committee on Exports and Imports at the Confederation of Indian Industry (CII), noted that this move significantly bolsters economic cooperation between the two nations and promotes regional currency usage over the US dollar. 

This development is expected to stimulate Indian exports to Bangladesh, addressing the existing trade imbalance where Indian imports into Bangladesh exceed Bangladeshi exports to India. By settling trade in rupees, Indian exporters can offer more competitive prices to their Bangladeshi counterparts, potentially boosting exports. 

Moreover, the rupee-centric trade arrangement is anticipated to benefit small and medium-sized enterprises (SMEs) in both countries. SMEs often grapple with foreign exchange challenges, impeding international sourcing. Settling trade in rupees enables SMEs to bypass the need to convert funds, facilitating more cost-effective business transactions. 

Jointly declared by the central banks of India and Bangladesh, this rupee settlement pact is a positive stride, fostering economic ties and diminishing dependence on the US dollar. The development is poised to enhance business interactions and potentially reshape trade dynamics between the two nations, ushering in mutually beneficial economic ties.