India has announced plans to facilitate the settlement of international transactions using its national currency, the rupee. The move is aimed at helping countries experiencing a US dollar shortage and is part of India's efforts to increase the global profile of the rupee. The new measure will give countries such as Sri Lanka, Bangladesh, and Egypt an alternative to the US dollar when making payments for trade with India. This move comes as other countries such as China, Brazil, and Russia have also been promoting the use of their currencies for international transactions, signaling a shift away from the US dollar hegemony.
India's new foreign trade policy framework, which came into effect on April 1, includes the option of settling payments in Indian rupees. Commerce Secretary Sunil Barthwal has stated that this measure will help protect countries from a hypothetical dollar drought. The move is also part of India's efforts to make the Indian rupee a global currency, which will further enhance its position as a global trading hub.
The move towards using national currencies for international transactions is a growing trend among emerging economies. China has been promoting the use of the Chinese yuan, and Russia has recently supported settling payments with emerging economies in Asia, Africa, and Latin America using the yuan. Brazil has also agreed to use national currencies instead of the US dollar for bilateral settlements with China. The Association of Southeast Asian Nations (ASEAN) is also pushing for its members to use national currencies for payments as a way to reduce their dependence on the US dollar. These moves signal a shift away from the US dollar as the dominant currency for international transactions, as emerging economies seek to protect themselves from potential US sanctions and economic instability.
