July 13, 2022
2 mins read

RBI eyes de-dollarisation of Indian economy

Implementation of this process will require extensive deliberations with trading partners. The success of this measure will depend on how many of them are willing to trade in the INR….reports Asian Lite News

The RBI is aiming to de-dollarize global trade and the Indian economy, Motilal Oswal Financial Services said in a report.

In another move aimed at supporting the currency, the RBI allowed international trade settlement in INR on Monday.

“In order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports and imports in INR,” the press release issued by the RBI stated.

While this seems like a welcome initiative, we believe that it is a long drawn process and is likely to play out fully over decades.

Implementation of this process will require extensive deliberations with trading partners. The success of this measure will depend on how many of them are willing to trade in the INR.

There is a possibility that if India asks for its import settlement in INR, the trading partner may ask for its import settlement in its local currency, which indicates that RBI, along with other central banks, will have to hold their foreign exchange reserves in many currencies. If so, it could further increase volatility and fluctuations in the currency market, the report said.

Foreign exchange reserves held with the RBI comprise four components — foreign currency assets (FCA), gold, Special Drawing Rights (SDR), and reserve tranche position (RTP) with the International Monetary Fund (IMF).

On an average, 93 per cent of total foreign exchange reserves constitute FCA. The latter is maintained with the RBI as a multi-currency portfolio comprising major currencies (such as the US dollar, Euro, Pound sterling, and the Japanese yen), and is valued in USD terms.

This move can also help reduce the effectiveness of US sanctions recently imposed on Russia on account of its invasion of Ukraine, or sanctions imposed even otherwise. If the INR has to play an international role, it needs to be more freely determined.

ALSO READ: Twitter shares slump amid Musk’s walkout

Previous Story

‘A lot of physical training needed to depict sports stars on screen’

Next Story

Global PC shipments fall 12.6%

Latest from India News

AUSTRAHIND 2025 Begins

AUSTRAHIND 2025 is aimed at enhancing military cooperation, improving interoperability and providing a platform for participating armies to exchange tactics…reports Asian Lite News In a major step forward for India-Australia defence ties,

Kirti Singh Leads India’s NAM Mission in Uganda

The participation reaffirms India’s commitment to the principles and values of the movement…reports Asian Lite News Minister of State for External Affairs Kirti Vardhan Singh will head India’s delegation to the 19th

Alive With Opportunity

UK-India relationship ‘Alive with Opportunity’ as HMS Richmond hosts business showcase. The event was attended by more than 400 leading figures representing government, businesses, investors, and cultural icons, celebrating the strengthening partnership

India Builds Bridges at G20

Union Minister Jitin Prasada attended the meeting and held bilateral talks with counterparts from member nations….reports Asian Lite News India held talks with several nations on strengthening trade and technology ties, focusing

India, Japan eye Central Asia

Initial projects could focus on logistics hubs, renewable energy ventures, and agro-processing plants that address the region’s immediate economic needs…report Asian Lite News Prime Minister Narendra Modi’s recent visit to Tokyo established
Go toTop

Don't Miss

BJP got 84% of electoral bonds bought by top 10 individuals

The top donor, ArcelorMittal’s chairperson Lakshmi Niwas Mittal, bought bonds

Congress demands resignation of Kerala CM

CPI-M state Secretary M.V. Govindan said the Lok Sabha election