The Indian rupee goes global as 18 nations have consented to engage in rupee trade. In the midst of a global economic slump, there is a worldwide effort to reduce the role of the US dollar in international trade, and India is leveraging this trend to its advantage. Consequently, traders will be able to purchase goods from foreign countries using the Indian rupee as payment.
The Reserve Bank of India (RBI) has granted permission to 18 nations, such as Germany, Kenya, Sri Lanka, Singapore, the UK, and others, to conduct transactions using the Indian rupee. These countries will utilize this currency to invest in Indian firms and purchase goods and services from India, resulting in lower trade-related transaction expenses and increased trade.
Many countries consider India to be a crucial trading partner, especially due to the use of the Rupee as a currency for settlement and invoicing. This can help mitigate the exchange rate risks that these traders face in the global market.
In addition, the use of the Rupee as a settlement and invoicing currency can have a positive impact on India’s trade deficit. India’s merchandise trade deficit, calculated as the difference between exports and imports, stood at $233 billion between April 2022 and January 2023. By facilitating more countries to trade with India in Rupees, it will help to increase India’s exports and reduce the trade deficit. This move could also potentially enhance trade with neighboring South Asian countries like Nepal and Bhutan.
Moreover, the adoption of the Rupee as a settlement and invoicing currency can also foster the growth of financial markets. In the past, BRICS nations have attempted to reduce the reliance on the US dollar in the global market, particularly after the Western world imposed sanctions on Russia. This situation enabled China to emerge as a possible substitute to the US.
Indian rupee goes global is a huge question mark on the performance of Pakistani rupee. Is PKR going to improve in coming future? Find out more about this on Explore It Beyond!
