India creates conditions for payments in its national currency, the rupee, in international trade to strengthen it, reported Bloomberg, citing its own sources.
The Reserve Bank of India (RBI, the central bank) is simplifying the procedures for mutual payments in rupees for countries participating in free trade zones. The first step will be to establish direct exchange rates between the rupee and the currencies of these countries, without tying it to the dollar. Thus, the RBI will establish direct exchange rates for the rupee against the currencies of the United Arab Emirates and Indonesia, with similar mechanisms being developed for other countries.
The policy of the government of Indian Prime Minister Narendra Modi to expand the use of the rupee in international transactions will make the national economy less vulnerable to external shocks. At the same time, Gaura Sen Gupta, chief economist at IDFC FIRST Bank, notes that New Delhi does not want this course to be “perceived as de-dollarization“.
India is negotiating free trade zones with several countries, including the US and the EU, and all of them are discussing payments in national currencies. The promotion of the rupee is becoming an integral part of the country's foreign economic policy, aimed at joining the ranks of developed countries by 2047.