The Reserve Bank of India (RBI) has taken significant steps to promote the use of Indian Rupee (INR) in international trade. Here's a breakdown of the key measures:
Key Measures:
Liberalised Norms: The RBI has announced liberalised norms to encourage the use of Indian Rupee and local/national currencies for cross-border transactions. This move comes amid a sharp devaluation of the rupee against the US dollar.
MoUs with Other Countries: The RBI has signed MoUs with the central banks of the UAE, Indonesia, and Maldives to promote cross-border transactions in local currencies, including the Indian Rupee.
Special Rupee Vostro Account (SRVA): This mechanism allows foreign banks to open INR accounts with Indian banks for settling international trade transactions.
Expanded Use of Repatriable INR Accounts:
Non-residents can now settle transactions with other non-residents using balances in their repatriable INR accounts.
Non-residents can use these balances for foreign investment in non-debt instruments.
Flexibility for Indian Exporters: Indian exporters can now open accounts in any foreign currency overseas for settling trade transactions.
Implications of these Measures:
Reduced Reliance on US Dollar: By promoting the use of INR in international trade, India aims to reduce its reliance on the US dollar, which can help mitigate the impact of dollar fluctuations on the Indian economy.
Increased Trade with Partner Countries: These measures are expected to boost trade with countries like the UAE, Indonesia, and Maldives, as it will make transactions more convenient and cost-effective.
Enhanced International Visibility of the Rupee: The increased use of INR in international trade will enhance its international visibility and acceptance, potentially strengthening its position as a global currency.
Reduced Transaction Costs: Settling transactions in local currencies can reduce transaction costs associated with currency conversions.
Overall:
The RBI's initiatives to promote the use of INR in international trade are a significant step towards strengthening the Indian economy and reducing its vulnerability to global currency fluctuations.
These measures are expected to have a positive impact on India's trade relations with partner countries and enhance the international standing of the Indian Rupee.
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