A step closer to internationalization of the rupee
16 March, 2023 | Archana Raj
The Reserve Bank of India has approved the opening of 60 special rupee Vostro accounts in 18 countries The Indian rupee is now edging closer to becoming an international currency with more and more...
The Reserve Bank of India has approved the opening of 60 special rupee Vostro accounts in 18 countries
The Indian rupee is now edging closer to becoming an international currency with more and more countries working to de-dollars global trade.
Several nations have now expressed interest in facilitating international trade in Indian rupees. It is important to note that India has been trying to promote the use of rupees for trade settlement with other countries after the west and European nations imposed sanctions. For the purpose of making international trade easy and smooth in Indian rupees, the reserve bank of India has approved the opening of 60 special rupee Vostro accounts in 18 countries including Russia and Sri Lanka.
”If we look at dollar today, 90 per cent of the international Forex trading is done in US Dollars, almost 40-50% of the international borrowing happens in US Dollars. The supremacy of US Dollars as of today is unquestionable. But when referring to the bank collapses, the dominoes effect happening in the US, I can say, dollar as a currency can lose its significance in the times to come,” Sr. economist, Sharad Kholi said
”Success in Vostro account lies in having a strong international trade i.e. exports & imports must continue to grow. We must have RBI like another institution to be able to take currency trade,” he added.
“We need capital account convertibility; without full convertibility of the rupee, rupee becoming an international currency is a pipe dream,” he further added.
What we see is a revolution in making, It was in July 2022 when the RBI for the first time introduced a bill saying you can trade in rupees instead of dollars, Political Commentator, Sumit Peer said.
Based on the RBI website and our foreign exchange reserves, we have reduced dollar reserves and increased euro reserves. All of the new free trade agreements, whether they relate to Gulf Cooperation Council, United Arab Emirates, or Australia, are being discussed in terms of rupees, he further added.