The Reserve Bank of India(RBI) has introduced a new mechanism to settle GLOBAL trade agreements in Indian Rupees. It will “promote the growth of global trade” and support the increasing interest in trading in Indian rupees.
All imports and exports can be invoiced in INR under this agreement. The market will determine the exchange rates. Authorised dealer (AD) banks can open rupee Vostro accounts with the corresponding banks on behalf of the partner trading company.
A company can approach an AD bank for a rupee vostro account. On discussions and approval of the arrangement by the RBI, the vostro account will be approved.
Ukraine-Russia crisis that is crippling the world economy was the reason behind the decision. This will aid in avoiding rules that prevent the use of a global currency for trade in different countries.
The move to settle global trade agreements in Indian rupees is commendable. The RBI has taken a mammoth step that will increase the value of the Indian rupee in the long run. It will provide new avenues for payment for imports.
Trade Agreements In The World
International trade is a driving force behind economic growth, and two so-called “mega-regional” trade deals are dominating public debate on the issue: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).
But there are already 420 regional trade agreements in force around the world, according to the World Trade Organization. Although not all are free trade agreements (FTAs), they still shape global trade as we know it.
