Trade between India and Malaysia is now able to be settled with Indian Rupees, the India Ministry of External Affairs (MEA) announced in a statement Saturday.
This move strikes a blow to the hegemony US dollar. “This initiative by the Reserve Bank of India (RBI) is aimed at facilitating the growth of global trade and to support the interests of the global trading community in Indian Rupees (INR),” the statement from the MEA reads.
“This mechanism will allow the Indian and Malaysian traders to invoice the trade in Indian rupee and therefore achieve better pricing for goods and services traded. This mechanism is expected to also benefit the traders on both sides as they can directly trade in Indian Rupee and therefore save on currency conversion spreads.”
🇮🇳 India to settle trade in Indian rupees with certain countries instead of US dollars, Commerce Secretary says.
— Watcher.Guru (@WatcherGuru) April 1, 2023
A Special Rupee Vostro Account was “operationalized” by the India International Bank of Malaysia to serve as the account where Indian rupees can be transferred to and from.
$17 billion in trade occurred between India and Malaysia in 2021. The Reserve Bank of India (RBI) also authorized 18 countries, including Russia, Germany, Singapore, Sri Lanka, and Tanzania, to open Vostro accounts, which could lead to the strengthening of the rupee.
India also released an updated foreign trade policy for the next five years. Their new strategy aims to “encourage” the rupee’s widespread adoption. The policy hopes Indian exports will reach $2 trillion by 2030.