New Delhi: Indian rupee to become global currency. With 18 countries showing interest in doing business in the rupee, the Indian rupee is becoming an important force in the global financial market. The move against the dollar is strong in international markets. The Indian rupee is taking full advantage of this move. RBI has already allowed 18 countries like Germany, Kenya, Sri Lanka, Singapore, UK to transact in rupees. As trade becomes denominated in rupees, transaction costs between the two countries will decrease and trade will increase.
The central government has made a radical change in the foreign trade policy to strengthen the rupee in the international market. International transactions denominated in rupees are done through separate Vostro accounts. With the shift to this system, imports and exports between the two countries will be denominated in rupees.
According to a report presented in Parliament on March 14, the RBI has approved steps to open Special Rupee Vostro Accounts (SRVAs) for 18 countries. These include Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Botswana, Fiji, Germany, Guyana, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda and the United Kingdom.
Using the rupee for global trade will significantly reduce India’s trade deficit. India can export more as more countries are willing to trade in rupees. This will increase trade with South Asian countries like Nepal and Bhutan.