India Promotes Rupee in Global Trade to Boost Currency

• RBI is enabling direct rupee settlements with key trade partners, reducing dependence on the US dollar.
• Reference rates are being set for currencies like UAE dirham, Indonesian rupiah, and neighboring countries.
• The move aims to boost the rupee's global role, lower trade risks, and support India’s long-term economic growth.

India is actively promoting the use of the rupee in international trade, allowing free-trade partners to settle transactions directly in the local currency. The Reserve Bank of India (RBI) plans to establish direct rupee reference rates that do not rely on a third currency such as the US dollar, a person familiar with the matter said.

Earlier this month, the RBI announced it will set reference rates for the UAE dirham and Indonesia’s rupiah, in addition to existing links with the US dollar, Japanese yen, euro, and British pound. Discussions are also underway to develop rates for neighboring countries and Mauritius.

The initiative forms part of Prime Minister Narendra Modi’s strategy to increase the rupee’s international use. Greater adoption of the local currency can reduce transaction costs, limit the need for foreign exchange reserves, and make the economy less vulnerable to global shocks. Experts say this move focuses on expanding usability for trade and capital flows, not on de-dollarization.

India has free-trade agreements with over a dozen countries and is negotiating deals with the US, EU, Peru, Oman, and New Zealand. Additionally, the country has six preferential trade agreements and recently signed a comprehensive Trade and Economic Partnership Agreement with the European Free Trade Association.

Also Read: RBI Governor Champions India's Digital Model for Global Inclusion

While the rupee remains Asia’s second-worst performing currency this year, authorities hope that expanding its international role through trade and bilateral agreements will gradually strengthen its credibility and global presence.

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