Businesses can do foreign trade using yuan: BB

Bangladesh Bank yesterday said local banks would be able to maintain accounts in Chinese yuan or renminbi with their corresponding lenders or branches abroad so as to help local businesses settle transactions for foreign trade using the currency. 

A Bangladesh Bank official said the government had declared the Chinese yuan or renminbi as a convertible currency in March 2014 by issuing a gazette notification.

But many banks were still shying away from settling transactions of foreign trade through the currency, said the official.

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Banks can now maintain accounts in Chinese Yuan

Against his backdrop, the central bank has issued the notice so that banks can lay emphasis on the issue, he said.

On top of that, local businesses have recently urged the central bank to take measures so that dependency on the US dollar can be reduced when settling transactions for foreign trade.

For this reason, the BB has reminded the banks about the matter.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said foreign trade would gain diversity if both businesses and banks come forward to use different currencies.

Such types of moves will also reduce the substantial dependency on a single foreign currency while opening and settling letters of credit, he said.

The country's foreign exchange market has been facing volatility soon after the inception of the Russia-Ukraine war.

Many banks are now facing a crisis of dollars due to the price hike of commodities in the global market amid global supply chain disruptions.

The country's foreign exchange reserves plummeted to less than $38 billion last week due to rising import payments whereas it was over $46 billion a year ago.

As per the government notification, the local businesses are allowed to settle their foreign trade by using eight foreign currencies, which are the US dollar, Canadian dollar, Australian dollar, Singapore dollar, euro, Great Britain pound, Swiss franc and Chinese yuan or renminbi.