Reserve Bank of India’s notification regarding settling transactions in rupees has the potential to create positive impacts in the economy. Discuss (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 2 years
KEY POINTS
· Internationalisation refers to the phenomenon of a national currency trading beyond its borders and actively used in the invoicing of trade and financial transactions, commodities, and foreign exchange reserves.
· The central bank unveiled a mechanism for international trade settlements in rupees at market-determined exchange rates.
· RBI’s move means that Indian importers can now make payments in the rupee, which will be credited to the special Vostro account of the correspondent bank of the partner country, while Indian exporters will be paid from the balances in the designated Vostro accounts.
· A vostro account is an account maintained in rupees by a local bank for a foreign bank.
· The surplus rupee balance Vostro accounts can be used for investments in government securities, payments for projects and investments and for export-import advance flow management.
· It has potential to internalise rupee in the long-term.Without free exit, other countries may not find this mechanism attractive.
· The mechanism can also come in handy for trade with certain African and South American countries facing severe forex shortages.
· With Russia unable to access its foreign currency reserves, trade settlement in rupees can emerge as a win-win deal for both the countries as India ramps up its purchases of crude oil from the sanctions-hit nation.
Ananta Kumar Muduli 2 years
Sir pls review
IAS Parliament 2 years
Try to elaborate on the positive impacts of the notification. Keep Writing.
Vignesh 2 years
kindly evaluate
IAS Parliament 2 years
Try to stick to word limit and bring coherence in the answer. Keep Writing.
K. V. A 2 years
Kindly review
IAS Parliament 2 years
Good attempt. Keep Writing.
