Rupee races to replace dollar as UAE to join 18 others to settle trade in INR

New Delhi: UAE may soon join 18 other countries that have agreed to trade in the India Rupees and give up dollar as cross-border transaction mode.  Discussions are underway with the United Arab Emirates (UAE) for settling trade in Rupee-Dirham for imports and exports, a report by Financial Express quoted a senior official as saying. Soon top leaders of both the countries are expected to announce the deal. ‘Transaction much easier in local currency’ The official said India imports and exports in large quantity and also get a lot of remittances from the Gulf countries. “It becomes much easier to transact in the local currency rather than going to a third-country currency like the US dollar or Euro,” the official added. Must Read: Rupee closer to replacing dollar as 18 nations agree to trade in INR For the unversed, UAE is India’s third largest trading partner after the US and China. In the first half of the ongoing financial year, bilateral trade between India and UAE stood at $44 billion. In financial year 2022, India-UAE bilateral trade stood at about $73 billion. Late last month, top Indian banking and finance officials visited Abu Dhabi to discuss the details of the deal. Officials of central bank and finance department of both the countries have been working together since last year to put in place a Rupee-Dirham payment mechanism. India’s Reserve Bank of India (RBI) and UAE’s Central Bank officials have already done the groundwork for the introduction of bilateral trade in local currencies. Last year, India had prepared a concept paper on Rupee-Dirham trade and shared it with the UAE. Also, India and UAE also signed a free trade agreement (FTA) that started in May last year. How will trade Rupee-Dirham help India and UAE? The UAE and India currently use the US dollar to settle trade payments. If they start trading in local currencies, they would be able to save on account of foreign currency conversion fees and facilitate smoother flow of capital. Also Read: Indian rupee could be the new dollar, says ‘Doctor Doom’ Nouriel Roubini Also, the transaction costs for exporters and importers will be reduced. Once effective, trade in Rupee-Dirham will be conducted through vostro accounts of banks of the two countries. 18 countries agree to trade in Indian rupee Last week, India’s Minister of State for Finance Bhagwat Karad said RBI had granted approval to “domestic and foreign AD (Authorised Dealer) banks in 60 cases for opening SRVAs of banks from 18 nations” for settling payments in Indian rupees. The 18 countries that have been allowed to trade in Indian rupees are - Russia, Singapore, Sri Lanka, Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Seychelles, Tanzania, Uganda and the United Kingdom. Must Read: Eight countries open 50 special rupee vostro accounts in 6 months to trade in INR The report quoted senior official saying that “a bilateral beginning has been made with these countries to trade in our own currencies and over a period of time the volumes will pick up.” Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook ,  Twitter  and  Instagram .