BANGLADESH INSTITUTE OF INTERNATIONAL AND STRATEGIC STUDIES

OPTIONS TO TRADE IN US DOLLAR: BANGLADESH PERSPECTIVE

Author: Benuka Ferdousi, Ishtiaque Selim, Fahim Shahriar Ornob, Rafa Ali

DOI Link: https://www.doi.org/10.56888/BIISSj2024v45n4a3

ABSTRACT

In recent times, Bangladesh has been gripped by an acute dollar crisis, which is an outcome of some external and internal events such as, rapid spread of the novel coronavirus, the outbreak of the Russia-Ukraine conflict and the slow-down of the influx of foreign remittances into Bangladesh. The dollar crunch has led to the devaluation of the Bangladeshi Taka (BDT), an increase in trade imbalance, and a rise in inflation. To address this crisis, the article, while examining potential of barter trade, currency swap and trading in alternative currencies, argues that the options, at present state of Bangladesh’s economy, will not be viable owing to some factors e.g., lack of trade complementarity, a significant trade imbalance disfavoring Bangladesh, the nature of current geopolitics and lack of interest on the part of trading partners and business communities to accept a currency other than US dollar (US$). Therefore, the paper concludes that the US$ in the coming days would still remain the dominant currency for Bangladesh in international transactions.