Indian rupee is now going as an International Currency as 18 countries have agreed to trade in the INR.
The world is trying to de-dollarize the international market due to a global economic slowdown. By using this situation for own benefit India decided to trade with 18 countries in its Rupee after which traders will be able to import goods from other countries by paying in rupees.
The central bank of India, RBI, has allowed 18 countries which include Germany, Kenya, Sri Lanka, Singapore, the UK and many other countries to transact in rupee. These countries will use this money to invest in Indian companies and buy goods and services from India. It will reduce trade-related transaction costs and boost trade and their economy.
India is among the most important trading partners to many countries using Rupee as a settlement and invoicing currency, it will reduce exchange rate risks faced by these traders in the international market.
It will also reduce India’s trade deficit. India’s merchandise trade deficit, which is export minus import, was $233 bn from April 2022 to January 2023. With this, India will be able to export more as more countries are willing to trade in rupees. It will boost trade with South-Asian countries such as Nepal and Bhutan.
On top of that, it will promote the development of financial markets.