The Indian government has announced that it will make it easier to settle international transactions using its national currency, the rupee. As part of its foreign trade policy framework implemented on April 1, the country introduced this measure to ease payments to countries experiencing a drop in the US dollar.
India to offer rupee-based settlement options for international trade
The Indian government is introducing new settlement methods other than the US dollar for international trade. The new foreign trade policy guidewhich was implemented on April 1, includes a new Indian rupee payment settlement option, giving countries facing a falling US dollar a way to continue trading with the country.
The new directive would be aimed at helping countries like Sri Lanka, Bangladesh and Egypt, which are facing difficulties in obtaining US dollars to continue exchanging goods with India. Trade Secretary Sunil Barthwal fixed that this measure would help these countries to disaster proof against a hypothetical drought of dollars.
The move is part of New Delhi’s efforts to profile its currency globally. In this regard, the Indian Department of Commerce explained this new foreign trade policy plan was designed to “work to make the Indian rupee a global currency, adding further momentum to India’s emergence as the global trading hub.”
Countries moving away from the hegemony of the US dollar
India is the latest in a line of countries that have taken some initiatives to stop using US dollars, at least for international deals. China, part of the BRICS bloc, which is also integrated with India, Brazil, Russia and South Africa, has also been promoting the use of the Chinese yuan as part of an international de-dollarization policy.
At the meeting between Chinese President Xi Jinping and Russian President Vladimir Putin as part of Xi’s visit to Russia on March 21, Putin supported the use of the Chinese yuan to settle payments with emerging economies in Asia, Africa and Latam. Also, more recently, China signed an agreement with the Brazilian government to get rid of the dollar for its bilateral agreements, substituting it for national currencies.
Other blocs are also contemplating ways to lessen their reliance on the US dollar. ASEAN, the Association of Southeast Asian Nations, a bloc that includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, is entrepreneur its members to use national currencies for payments as they fear secondary US sanctions for failing to enforce a trade ban on Russia.
What do you think of Indian rupee-focused settlement options to reduce reliance on the dollar? Tell us in the comment section below.
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