The central bank has now taken a step after the Trading Corporation of Bangladesh to arrest the spiralling onion price, instructing banks to keep the interest rate within 11 percent for import financing of the ingredient.

In a letter yesterday, Bangladesh Bank also advised banks to keep the rate of margin at the lowest level when opening letters of credit for onion imports.

Onion prices went up as much as 50 percent on Tuesday from a week ago after India, a major source of the key cooking ingredient, raised the minimum export price by $275 a tonne.

India increased the minimum export price of onion to $700 a tonne from $425 earlier this week to discourage exports and increase supply in its domestic market to offset the escalating prices.

Unfavourable weather affected the production of the crop in India.

Onions are now selling at Tk 90 a kilogram in the capital's kitchen markets, up from Tk 60 a week ago, according to TCB.

To cool down prices, TCB has decided to run open-market sales next month and has already floated tenders to buy 400 tonnes of the vegetable locally, with more to follow in the coming days.

We want to ensure that people get the cooking ingredient at reasonable prices,” said TCB spokesman Md Humayun Kabir.

The state-run agency though is yet to decide on the price at which it will resell the onions to consumers, Kabir said, adding that it will be lower than the current average market price.

Bangladesh consumes nearly 21 lakh tonnes of onion a year, of which 5-8 lakh tonnes are imported, mainly from India, according to data from Bangladesh Bureau of Statistics and National Board of Revenue. Domestic production meets the rest of the demand.