India pushes to expand rupee settlement with key trade partners - The Economic Times
India is actively promoting the international use of its currency by enabling trade settlements in rupees with major partners. The central bank is setting up direct rupee exchange rates that bypass the US dollar, along with reference rates for currencies like the UAE dirham and Indonesia rupiah. This initiative aims to reduce transaction costs, minimize reliance on foreign currency reserves, and make India’s economy more resilient to global shocks. Efforts align with the government’s long-term vision of enhancing the rupee’s global stature and positioning India as a developed nation by 2047. Free-trade agreements with countries like the UK, Australia, and UAE are being leveraged to expand rupee invoicing. While increasing international use, authorities emphasize that this is not a move to replace the dollar but to strengthen the rupee’s role in trade and capital flows, following examples set by other major Asian economies.
The Key points
- India promotes rupee settlements with global trade partners.
- Direct rupee rates are being developed, independent of the dollar.
- Reference rates established for UAE dirham and Indonesian rupiah.
- Initiative reduces transaction costs and currency reserve dependence.
- Strengthens economy against global financial shocks.
- Supports India’s goal of becoming a developed nation by 2047.
- Leverages free-trade agreements for broader rupee invoicing.
- Authorities stress this is not a de-dollarization effort.
- Aims to increase rupee use in trade and capital transactions.
- Mirrors efforts by other Asian countries to internationalize local currencies.
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