India to soon trade in rupee with UAE, Malaysia and Nigeria

New Delhi: After Russia, trade settlement in Indian rupee will soon be possible with the UAE, Malaysia and Nigeria. The rupee-dirham trade settlement is expected anytime soon as senior finance and bank officials from India are on a three-day trip to Abu Dhabi to finalise the details of the deal. A report by Business Standard quoted sources saying India may also ink pacts with Malaysia, and Nigeria to facilitate settlement of international trade in local currencies by next month. Once effective, the transaction costs for exporters and importers will be reduced. As per the report, officials from India’s central bank - Reserve Bank of India (RBI) - are in discussion with their counterparts in UAE, Nigeria and Russia over the last few months to work out on rupee trade mechanism with the local currencies of the countries. India-UAE trade UAE is India’s third largest trading partner after US and China. The report quoted people aware of the development saying discussions with the UAE are at an “advanced stage” and talks with Malaysia and Nigeria are progressing well. “Memorandums of understanding (MoUs) can be signed as early as next month,” they said. Don’t Miss: Indian rupee could be the new dollar, says ‘Doctor Doom’ Nouriel Roubini A report by New Indian Express quoted sources saying that RBI and UAE’s Central Bank officials have already done the groundwork for the introduction of bilateral trade in local currencies. “The deal would soon be announced by the top leaders of the two countries,” they said. Reports say a concept paper on rupee-dirham trade was prepared by India and shared with the UAE last year. The UAE’s central bank has already designated a nodal person for the trade settlement mechanism. Also Read: Russia starts foreign trade settlements in rupee, more countries to join These countries now use the US dollar for trade settlement payments. The switch to local currencies from dollar will result in savings on account of foreign currency conversion fees and enable an easier flow of capital. India and UAE also signed a free trade agreement (FTA) that started from May last year. India-Nigeria local currencies trade Several African countries, including Nigeria, have expressed interest to trade in local currency with India because of the foreign exchange crisis. Why countries want to give up trade settlement in US dollar? “With the fear of recession looming this year, several countries are expected to grapple with the forex crisis,” the Business Standard report quoted an official saying. Also, trading in local currencies help fillip bilateral trade. Trade partners -exporters and importers - lose money on currency exchange. It is therefore, most countries have been working out a framework that will reduce the cost of transaction and do away with the practice of trading via a third currency. The idea of trading in local currencies comes in the backdrop of India´s latest push towards the internationalisation of Indian rupee (INR). Must Read: Indian rupee going global? After Russia, 35 countries show interest in INR trade settlement mechanism India has started the ambitious initiative to reduce the use of the dollar and promote the rupee for bilateral trade. For the unversed, India had a rupee-rouble exchange mechanism with Russia. Both the countries have decided to start trade in their local currencies after Western sanctions following the Russian invasion of Ukraine on 24 February, 2022. Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.