Rupee closer to replacing dollar as 18 nations agree to trade in INR

NEWDELHI-UAEmaysoonjoin18othercountriesthathave agreed to trade in the India Rupees and give up dollar as cross-bordertransactionmode.

Discussions are underway with the United Arab Emirates (UAE) for settling trade in Rupee-Dirham for imports and exports, a report quoted a senior official as saying. Soon top leaders of both the countries are expected to announce the deal.

‘Transactionmucheasierinlocalcurrency’

The official said India imports and exports in large quantity and also get a lot of remittances from the Gulf countries.

“It becomes much easier to transact in the local currency rather than going to a third-country currency like the US dollarorEuro,”theofficialadded.

For the unversed, UAE is India’s third largest trading partner after the US and China. In the first half of the ongoing financial year, bilateral trade between India and UAE stood at $44billion.

In financial year 2022, India-UAE bilateral trade stood at about$73billion.

Late last month, top Indian banking and finance officials visitedAbuDhabitodiscussthedetailsofthedeal.

Officials of central bank and finance department of both the countries have been working together since last year to putinplaceaRupee-Dirhampaymentmechanism.

India’s Reserve Bank of India (RBI) and UAE’s Central Bank officials have already done the groundwork for the introductionofbilateraltradeinlocalcurrencies.

Last year, India had prepared a concept paper on RupeeDirhamtradeandshareditwiththeUAE.

Also, India and UAE also signed a free trade agreement (FTA)thatstartedinMaylastyear.

18countriesagreetotradeinIndianrupee

Last week, India’s Minister of State for Finance Bhagwat Karad said RBI had granted approval to “domestic and foreign AD (Authorised Dealer) banks in 60 cases for opening SRVAs of banks from 18 nations” for settling payments in Indianrupees.

The 18 countries that have been allowed to trade in Indian rupees are – Russia, Singapore, Sri Lanka, Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Seychelles, Tanzania, UgandaandtheUnitedKingdom.

The report quoted senior official saying that “a bilateral beginning has been made with these countries to trade in our own currencies and over a period of time the volumes will pick up.”

Container movement to fall in 2023 : Mizuho Bank

TOKYO : Mizuho Bank‘s industry research division predicts that demand for maritime container transport will fall in 2023 in a study on current supply and demand trends and shorttermforecastsinkeyindustries.

Mizuho Bank believes that box movement will be slower in 2023, especially in the Asia-Europe and Asia-North America trades, due to declining consumption and normalising demand, which has increased dramatically since the second halfof2020.

The third largest financial services company in Japan anticipates a slight 1.4% year-on-year decline in container movement this year.

Spot rates have reverted to pre-pandemic levels, and annual contract rates are expected to fall. As a result, the bank expects that freight prices will be adjusted to reflect those in 2019.