India for 'de-dollarising' trade with more nations

NEW DELHI: India is exploring the possibility of developing trade settlement mechanisms in national currencies with East Asian countries and members of the Asian Clearing Union (ACU) after having made similar arrangements with 18 other nations, people familiar with the matter said

- Rajeev Jayaswal Rezaul H Laskar

The move is aimed at having greater stability in the global financial system, internationalising the Indian rupee and reducing dependency on hard currencies such as the US dollar, two persons said. These efforts come on the heels of moves by Iran, the current chair of ACU, to "de-dollarise" transactions within the body that facilitates settlement of payments on a multilateral basis, a third person said.

The ongoing talks are aimed at reaching mutually agreed alternative arrangements, in addition to the existing system of using freely convertible currencies such as the US dollar, the people said on the condition of anonymity.

China, Japan, Korea, Taiwan and Hong Kong are some major East Asian economies. The ACU, established in 1974 at the initiative of the United Nations' Economic and Social Commission for Asia and the Pacific (ESCAP), is a payment arrangement to settle intra-regional transactions among the participating central banks of Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka.

Efforts by the ACU to explo the use of domestic currencies for trade settlement are being pushed by Iran, which is also home to the headquarters of the body, the people said.