Certain financial institutions in Bangladesh are exploring for Chinese payment channels to settle transactions with Russian banks that were removed from the SWIFT system to overcome the challenges experienced by importers and exporters as a result of Western sanctions following Russia’s attack on Ukraine, The Asian Age reported.
The Bangladeshi government is apparently under pressure from some pro-Chinese high-ups to switch to the Chinese currency Yuan for foreign transactions. However, analysts have warned that using the Yuan for foreign payments could result in financial catastrophe. Bangladesh’s relations with the United States of America will undoubtedly be impacted if the country abandons the dollar. One of Bangladesh’s most important development partners is the United States. Bangladesh shouldn't attempt to bypass SWIFT either because most of its readymade garment exports go to the USA and European nations, all utilising SWIFT for international transactions. Making poor decisions might seriously damage both the economy and the sovereignty of Bangladesh, as per a report published in The Asian Age.
Cheques will be cleared in Yuan rather than dollars when transactions are conducted through China. But the dollar is the strongest foreign currency. Moving to the Yuan for international trade will hurt Bangladesh’s remittances from abroad and lower export revenue as well. Therefore, it would not be advisable to even consider substituting dollars for Yuan, according to The Asian Age.
Bangladesh is resorting to alternate currency arrangements, including the usage of the Chinese Yuan in international transactions, due to the strong dollar and its concern over declining foreign reserves.
The central bank of Bangladesh, Bangladesh Bank, announced in mid-September that authorised dealer banks (ADs) can conduct Yuan transactions for commerce with China.
This story is from the May 17, 2023 edition of The Business Guardian.
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This story is from the May 17, 2023 edition of The Business Guardian.
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