New Delhi: The deputy governor of the Reserve Bank of India said on September 30 that India has received responses for its mechanism for the settlement of international trade in rupees from four to five countries, in addition to interest from other countries.
“The response has been fairly good but since the process involves a lot of vetting at the level of banks, at the level of the central bank, at the level of the government, the initial process is taking some time,” T Rabi Sankar told reporters in Mumbai at a post-policy interaction.
When asked if Russia was one of the nations with an interest in the system, Sankar remained silent.
India had unveiled the new structure in July, claiming that it would foster increased interest in the rupee worldwide and encourage expansion of international trade.
Since Russia’s invasion of Ukraine and more recently due to unprecedented monetary tightening by central banks, the rupee has been under attack.
India was anticipated to be able to avoid sanctions that forbid the use of a major currency, such the US dollar, for trade with specific nations as a result of the decision to promote trade settlement in rupees.
For instance, sanctions have been imposed on Russia as a result of its invasion on Ukraine, with the US denying Russia access to the dollar.
Due to this, Indian businesses were forced to think about other methods of payment for imports in order to benefit from the reduced price of Russian goods. In recent months, India has expanded its purchases of Russian crude oil.
Banks would need RBI approval before implementing the rupee trade settlement system as part of the rupee settlement process.
The exchange rate between the currencies of the two trading partners will be established by the market, and all exports and imports under the agreement will be priced in rupees.
