India & UAE To Initiate Rupee-Dirham Based Bilateral Trading
There was a time when most of the international trades depended on the dollar currency. But now India & UAE are considering their own currencies for bilateral trading.
According to Sunjay Sudhir, the Indian ambassador to the UAE, India and the UAE are in discussions for a bilateral trade deal valued in rupees and dirhams.
According to news agency PTI, the central banks of India and the UAE are debating a concept paper on fostering bilateral trade in the national currencies of both nations in an effort to lower transaction costs.
According to Sudhir, India released the concept paper for trading in local currencies. Both nations see the value in this. India and the UAE have exchanged concept papers.
The central banks of the two nations are in conversation. Reduced transaction costs are the goal, according to Sudhir in New Delhi.
He also stated that the standard operating guidelines and modalities will be discussed by the central banks of both nations.
In order to strengthen their bilateral trade and economic connections, the UAE and India inked a free trade agreement (FTA) in February.
Bilateral commerce is anticipated to rise from the current $60 billion to $100 billion in the following five years as a result of the free trade agreement.
In 2020–21, the value of bilateral trade between the both countries India and the UAE was $43.3 billion. In 2020–21, total imports totaled $26.7 billion while exports were worth $16.7 billion. In 2019–20, $59.11 billion in two-way trade was reported, according to the media.
It is commonly assumed that if the system works as intended, it might eventually play a significant role in the internationalization of the Indian rupee.
If a currency is widely used as a means of trade around the globe, it is referred to as “international.”
Early in July, SBI Research published a research claiming that trade in commodities such as oil and other raw materials in currencies including the Renminbi, Hong Kong Dollar, and Arab Emirates Dirham had increased significantly.