Rupee pact will help India trade with Russia, Iran and South Asian neighbours: Report – Times of India

MUMBAI: The Indian central bank’s decision to pay importers with rupee and exporters in rupee is likely to ease trade with Russia and its South Asian neighbours, and help in the long-term goal of internationalization of the currency, experts said. Told.
On Monday, the Reserve Bank of India said that it has put in place a mechanism for international trade settlement in Indian Rupees (INR) with immediate effect.
reserve Bank of India “In order to promote the growth of global trade with emphasis on exports from India and to support the growing interest of the global trading community in the Indian Rupee, it has been decided to introduce an additional mechanism for invoicing, payment and settlement of exports.” is taken. /Import in INR.”
“The move could be particularly useful for neighboring countries, and also for countries willing to use it” Rupee As the base currency for business diversification in their settlement rules, said Rahul Bajoria, India’s chief economist at Barclays.
Mahesh Desai, chairman of the Engineering Export Promotion Council, said the new mechanism would “facilitate trade with countries under sanctions such as Iran and Russia.”
Trade between India and Russia has come to a complete standstill due to sanctions imposed on Russia over the war in Ukraine.
The new moves allow Indian exporters and importers to use special Rupee Vostro accounts to settle trade denominated in rupees, and banks will need RBI approval to use the settlement system.
Desai said, “We see this as the first step towards 100% convertibility of the rupee, noting that it will also reduce the risk of currency volatility for importers and exporters.