India, Malaysia move beyond dollar to settle trade in rupee
#GS03
Context:
- India and Malaysia have agreed to settle trade in the Indian rupee, the Ministry of External Affairs announced on Saturday.
Points to ponder:
- India and Malaysia have agreed to settle trade in Indian rupees, marking a significant step towards de-dollarisation of international trade for India.
- The move away from the US dollar is a result of ongoing efforts by Indian officials to safeguard Indian trade from the impact of the Ukraine crisis.
- The Union Bank of India has become the first bank in India to operationalise this option by opening a Special Rupee Vostro Account through its “corresponding bank” in Malaysia, the India International Bank of Malaysia.
- The Reserve Bank of India had allowed the settlement of international trade in the Indian Rupee in July 2022.
- The India-Malaysia bilateral trade touched $19.4 billion during 2021-22.
- This move is expected to help overcome currency-related obstacles and achieve better pricing for goods and services traded.
