India is in the advance stage of negotiating with the UAE, Malaysia and Nigeria for the settlement of international trade in the Indian rupee, and at least one memorandum of understanding (MoU) is expected to be concluded as early as within the next one month, Indian government sources said on Friday, February 24.
The sources said that currently a team of leading bankers and government officials are in Abu Dhabi to finalize the fine print of the international trade settlement in rupees, which held the potential to reduce costs of transactions for exporters-importers in the two markets.
Officials at the Reserve Bank of India (RBI) have also held rounds of discussions with their counterparts in Malaysia and Nigeria and much of the groundwork has already been completed.
India and the UAE had already concluded a free trade agreement (FTA) in May 2022 and trade settlement in local currencies will provide a further boost to bilateral trade between the two markets by reducing fees in currency conversion and facilitating cross-border flow of capital.
The UAE is India’s third largest trading partner after the US and China.
The Indian government in recent months has been attempting to ‘internationalize’ the rupee and this has been finding acceptance among several countries fearing recessionary trends will intensify and amid rising challenges of maintaining higher levels of foreign exchange reserves, the sources said.