Benefits of Internationalizing Indian Rupee

The internationalisation of the Indian Rupee is slated to bring several benefits to the domestic economy. For starters, undertaking economic transactions with the rest of the world in the Indian Rupee will lower the transaction cost of cross-border trade and investment operations by mitigating exchange rate risk and eliminating conversion charges. The use of rupees for international financial transactions, the ultimate form of internationalisation of a currency, will offer wider business opportunities in global capital markets for domestic financial institutions.

Moreover, the expanded scope of internationalisation of the rupee will ease foreign trade and aid capital flow, reduce dependence on forex reserves and bring down maintenance costs of forex reserves. It is slated to help boost the domestic economy by increasing trade volume, both import and export. Internationalisation of the Indian Rupee will also lead to increased trust in the Indian economy thereby making it easier for domestic players to attract both direct and institutional investment.