Moving away from dollar-Indian rupee gaining popularity
2022.12.16 01:40
Moving away from dollar-Indian rupee gaining popularity
Budrigannews.com – More nations are interested in India’s rupee trade settlement mechanism, which allows for the use of rupees rather than dollars and other major currencies in international transactions.
According to two sources and an official document reviewed by Reuters, Tajikistan, Cuba, Luxembourg, and Sudan have started talking to India about using the mechanism. India is considering using it. Russia has already used it since sanctions were imposed on Moscow because of the war in Ukraine.
The mechanism was established in July by the Reserve Bank of India (RBI).
According to a government official and an industry source who are aware of the development, the government wants to bring countries that are short on money into the mechanism. The sources declined to be named, as the matter is secret.
According to documents, the four nations have expressed an interest in opening vostro accounts—special rupee accounts—but partner banks in India have not yet provided these facilities. The Reserve Bank of India must approve these accounts’ opening.
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According to documents, Sri Lanka and Mauritius have also expressed interest and have had their special vostro accounts approved by the RBI.
According to the document, banks have received approval from India’s central bank to open 12 vostro for rupee trade with Russia. According to the same document, authorization has been granted to six additional accounts, five of which are for trade with Sri Lanka and one is for trade with Mauritius.
The federal finance ministry, the commerce ministry, and the RBI did not respond to inquiries.
India continues to discuss rupee denomination with larger trading partners, such as Saudi Arabia and the United Arab Emirates, important oil suppliers.
A second government official, who requested anonymity, stated that the Indian and UAE central banks are finalizing the specifics of a potential trade mechanism for the rupee and dirham. According to the government official, discussions regarding a rupee-riyal trade mechanism with Saudi Arabia continue.
The UAE and Saudi Arabia are talking through ways of effective financial planning Indian rupees they acquire as a feature of these exchanges, as the inlet country’s products to India surpass imports from it.
The official stated, “We have presented the option of investing additional rupees in Indian markets.”
The Indian central bank has permitted any rupee holdings to be invested in government securities as part of earlier this year’s regulations.
