Rupee settlement may result in $36 billion in yearly hard currency savings

13 Jul 2022 , 10:09 AM

Launching international trade in Indian rupees may result in yearly savings of $30-36 billion in hard currency and increase the potential for such deals with nations in the area, analysts told ET. This would relieve pressure on the exchange rate and increase trade opportunities.

The technique may be advantageous for Indian government bonds as well, and it may begin right away with Russia. Under the customized model, firms headquartered in India’s trading partners may use the surplus balance stored in a special Vostro account that would be formed under the rupee payment system to invest in the local capital market.

“Such rupee-denominated deals with specific nations minimize dollar outflows on account of imports when a country faces a record high current account deficit,” said Bank of Baroda Chief Economist Madan Sabnavis.