Dhaka is seeking alternative payment systems amid multiple sanctions, including Swift ban, against Russia as bilateral trade continues to suffer due to lack of safe transaction mechanism.
Last month, the Bangladesh mission in Russia sent a report to the Commerce Ministry to take alternative payment systems for exporting goods amid the US-led Western sanctions against Russia.
If sanctions are kept in place for a long time, there are possibilities of hyperinflation and economic turmoil only to adversely impact bilateral trade, the mission warned.
Trade will suffer to a great extent until and unless there is a free and safe payment system, it stated.
The US and the EU imposed multiple sanctions, including Swift ban, against Russia following its invasion of Ukraine, almost cutting the nuclear power off from the rest of the world.
The impasse comes with a series of restrictions, boycott, isolations and supply-chain blockade only to make a multiplier impact, according to the embassy report.
There is also a strong fear of secondary sanctions in case of doing business with Russia, it said.
According to a source, a proposal has been in discussion for trading in national currencies between Bangladesh and Russia for some time.
Both central banks had multiple meetings over the issue. However, the proposal is yet to get any approval for lack of an agreement on accepted business process.
Currently, Russian policy-makers are counting on being able to trade in their national currency the Ruble.
They also proposed a barter system for foreign trade.
The Russian Federation has been doing some international transactions in cryptocurrency with Brazil, Indonesia and African countries.
The Russian authorities and companies are using new ways to stop relying on dollars and euros, Russia is now increasingly turning to the Chinese Yuan.
The embassy said payments through ruble, yuan or cryptocurrency are all experimental now and need some time to make a pragmatic decision.
Bangladeshi chiefly exports apparels, almost 90%, to Russia.
As major buyers like H&M and ZARA have suspended their operations in Russia, Bangladesh faces an acute shortage of orders from Russia.
There are speculations on withholding or cancelling orders from the importers.
Transport cost has become very high to and from Russia.
The same applies to other Bangladeshi major exportables like jute, shrimp and tobacco.
Shrimp being a costly food is likely to witness a decline in demand amid potential recession in Russia.
Bangladeshi exports to Russia started falling in March 2022 and it is likely to fall drastically in FY23.
Negative export growth of 55.16% in July is already there mainly due to the Swift ban, according to the letter mentioned.
The volume of exports to Russia was $638.30 million in FY22.
