Add India to the de-dollarization campaign.
As part of broader efforts to internationalize the rupee, India’s government announced that it would begin offering its currency as an alternative for trade to nations that are experiencing a dollar crunch.
During a foreign trade policy meeting in New Delhi on Friday, Commerce Secretary Sunil Barthwal stated that it would support rupee trade with nations enduring a currency risk.
From Bloomberg:
Sri Lanka, Bangladesh and Egypt are facing dollar shortage and have shown interest to trade in the Indian currency, a government official later told reporters, declining to be identified citing rules. A lack of dollars played a party in forcing Sri Lanka to default on its debt last year, while Bangladesh recently took a loan from the IMF to shore up its own reserves.
India has been attempting to internationalize the rupee to reduce dollar demand and insulate its economy from global shocks. Officials have previously said that apart from Russia, countries in Africa and the Gulf region are also keen to trade in its local currency.
The central bank first unveiled plans for rupee settlement last year, a project that has received an “encouraging response” from other countries, Deputy Governor T. Rabi Shankar said in an address in October.
This is huge news as one of the world’s biggest countries is de-dollarizing.
If only the Federal Reserve had started tightening in the spring of 2020, the inflation crisis would not have destroyed the buck’s international reserve currency status so quickly.
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