CURRENCY CLASH

In the quest for global control, the battle between currencies has taken center stage

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The Indian government recently announced that its new foreign trade policy, which took effect on 1st April, will include measures to support international trade using the Indian rupee. The move aims to boost exports amid the global economic slowdown.

Commerce Secretary Sunil Barthwal has stated that India is prepared to trade in rupees with countries experiencing a shortage of US dollars. This move aims to make these countries “disaster-proof” and boost Indian exports.

The Indian rupee is gaining global recognition as 18 countries have agreed to trade using it, furthering the world’s efforts to de-dollarize the international market. This offers an opportunity for India to leverage the growing acceptance of its currency.

Under the new rules, traders will now be able to pay for imported goods in rupees. The Reserve Bank of India (RBI) has authorized 18 countries, including Germany, Kenya, Sri Lanka, Singapore, and the UK, to transact in the Indian currency. These countries can now invest in Indian companies and purchase goods and services from India, which will reduce trade-related transaction costs and boost commerce.

As India is a crucial trading partner to several countries, using the rupee as a settlement and invoicing currency will reduce exchange rate risks for these traders in the international market. The move will help reduce India’s trade deficit, which stood at $233 billion from April ’22 to January ’23, by enabling it to export more, as more countries are willing to trade in rupees.

The use of the Indian rupee for international trade settlements with other countries is a step towards reducing the dominance of the US dollar in global transactions, which is known as “de-dollarization.”