India and Bangladesh Start Bilateral Trade in Rupees

Current Context: India and Bangladesh have agreed to start bilateral trade in Bangladeshi currency taka and Indian currency rupee besides the US dollar. The trade transaction in rupees was launched on July 11, 2023, after a virtual meeting between the central bank governors of both countries.

• The move is aimed at reducing dependence on the US dollar and strengthening regional currency and trade. According to Bangladesh Bank, the exchange rate will be determined by the cross-currency rate method.
• The trade settlement in rupees will be based on Bangladesh’s total export earnings not exceeding that amount.
• Bangladesh’s import from India in the last fiscal year was around USD 13.69 billion, of which USD 2 billion will be traded in rupees while the rest will be paid in US dollars.
• Exports from Bangladesh to India were about USD 2 billion and transactions regarding these will be made in rupees and takas.

Question:

Q.1 Which two currencies will be used for bilateral trade between India and Bangladesh besides the US dollar?
a. Taka and Rupee
b. Yuan and Rupee
c. Taka and Euro
d. Yuan and Euro