MUMBAI: RBI has announced measures to promote internationalisation of the rupee, aiming to expand its use in trade, financing, and investment while reducing dependence on the dollar. The move comes even as the US is pressurising emerging markets from moving against the dollar.Financial Benchmarks India (FBIL) will publish reference rates for select currencies of India’s major trading partners including the UAE’s dirham and Indonesian rupiah alongside the dollar, euro, pound, and yen. This allows more currency pairs to be quoted directly against the rupee, reducing intermediary conversions, improving price discovery, and deepening the domestic forex market.By setting transparent reference rates for major and partner currencies, RBI enables rupee-based trade settlement without costly dollar conversions — cutting transaction costs, reducing forex risk, simplifying invoicing, and bolstering the rupee’s global use and India’s de-dollarisation push.
De-dollarisation push
Authorised dealer (AD) banks in India and their overseas branches can now lend in rupees to residents of Bhutan, Nepal, and Sri Lanka, including local banks, boosting regional liquidity and promoting the rupee as a settlement currency.Special rupee vostro account (SRVA) balances held by foreign banks and entities can now be invested in corporate bonds and commercial papers, in addition to government securities, expanding rupee-denominated investment options and strengthening the rupee’s credibility as a settlement currency. Bankers say that given the lack of balance of trade with Russia, the move will enable rupees paid for oil exports to be deployed in Indian corporate bonds rather than letting them lay idle.Exporters with foreign currency accounts in international financial services centres (IFSCs) can repatriate proceeds within three months instead of one, enhancing flexibility, promoting IFSC banking, and increasing offshore rupee liquidity.
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