Singapore, Bangladesh, Sri Lanka, Gulf countries keen on rupee trade with India: Piyush Goyal – Firstpost

As the Indian Rupee gains traction and more countries ditch the dollar, Commerce and Industry Minister Piyush Goyal says that many developed and developing countries have shown interest in trading in the Indian currency with New Delhi to cut transaction costs.

“Bangladesh, Sri Lanka are already talking to us and they want us to start this immediately. Other countries in the Gulf region are looking at that. I think it’ll take some time for people to see the benefits. And then we’ll have more and more developed countries and countries in the Far East also joining the bandwagon. Singapore is already on board to some extent,” he said adding that development could be “game-changing.”

Goyal noted that countries are slowly realising that trading in domestic currencies has several advantages.

“Gradually the conscience is setting in that rather than converting all the transactions into a third currency, both ways, add significantly to transaction costs,” Goyal told PTI.

One of the biggest drawbacks of trading in other currencies is transaction losses which are a result of foreign exchange that require costs for conversion. The delays in the movement of money also push transactors’ costs.

India-UAE oil trade in rupee

In December, India made its first-ever payment in Indian rupees to purchase crude oil from the United Arab Emirates (UAE).

The significant move, which signals a greater push to trade in local currencies, comes a year after the Reserve Bank of India (RBI) allowed importers to pay in Indian rupees.

“We started with the UAE. The UAE was one of the first countries to accept this. It’s now picking up traction. We get a lot of countries who come and talk to us that they would like to also initiate direct transactions between the local currency and the rupee,” Goyal said.

Push for Indian rupee trade

The Indian Rupee is mostly stable against most of the international currencies and according to experts, this is one of the reasons that different nations today want to have trade relations built on rupee trade.

In recent months, several countries have accepted while others are considering trading in Indian rupees.

In July 2022, the Reserve Bank of India (RBI) allowed the settlement of India’s international trade in rupee. Accordingly, authorised Indian banks are permitted to open and maintain special rupee Vostro accounts of the partner trading country’s banks.

Since then, banks from as many as 22 countries have opened special Rupee vostro accounts in Indian banks to trade in local currencies.

These include Belarus, Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, Bangladesh, Maldives, Kazakhstan and the United Kingdom.

With inputs from PTI