India seeks to boost rupee over dollar in international trade
(MENAFN) India’s central bank is reportedly advancing plans to increase the use of the rupee in international trade, aiming to strengthen the currency’s global standing and reduce dependence on the US dollar.
According to government officials familiar with the matter, the Reserve Bank of India (RBI) is preparing mechanisms that will allow India’s free-trade partners to settle transactions directly in rupees. This would eliminate the need to calculate rates through a third-party currency, such as the dollar, which currently serves as the global benchmark.
Reports indicate that the RBI is developing official reference rates for several partner countries, including Mauritius, as part of the broader initiative. India has signed more than a dozen free-trade agreements with nations and regional blocs, including recent accords with the UK, Australia, and the UAE, and is now negotiating similar arrangements with others, including the United States.
Earlier this month, the central bank unveiled plans to establish rupee reference rates for the UAE dirham and Indonesia’s rupiah, with ongoing discussions about including rupee-based invoicing in all trade talks.
The move comes as some Indian refiners have begun purchasing Russian oil using the Chinese yuan, bypassing the dollar entirely. The RBI has also proposed that domestic banks be allowed to issue rupee loans to businesses in neighboring countries while setting official exchange rates for key trading partners.
Analysts say the push reflects a growing trend among nations seeking alternatives to the US dollar amid global geopolitical tensions, Western sanctions, and the impact of US monetary policies. Many countries have begun conducting trade and investment transactions in local currencies to reduce exposure to the dollar-based system.
“The focus of authorities is on internationalization of the rupee by increasing its usability for trade and capital transaction among neighboring countries,” said Gaura Sen Gupta, chief economist at IDFC FIRST Bank. “It’s never been portrayed as a de-dollarization move.”
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