In addition to the present methods of settlement in other currencies, trade between India and Malaysia can now be settled in Indian Rupee (INR).
This comes after the Reserve Bank of India’s decision to permit the settlement of foreign commerce in the Indian Rupee in July 2022. This initiative by the RBI intends to support the interests of the international trading community in the Indian Rupee (INR) and to assist the expansion of global trade . Importantly, India imports a sizable quantity of palm oil and its derivatives from Malaysia to meet its enormous domestic demand for edible oil.
“India International Bank of Malaysia, based in Kuala Lumpur has operationalised this mechanism by opening a Special Rupee Vostro Account through its Corresponding Bank in India that is Union Bank of India,” an official statement said by the Ministry of External Affairs said on Saturday.
India, meanwhile, on Friday launched its new Foreign Trade Policy (FTP) 2023, which aims to increase exports to USD 2 trillion by 2030 and places a particular emphasis on rupee-based international trade settlement.
The government has been working towards making the Indian Rupee a global currency and allowing international trade settlement. This mechanism will help in internationalizing the Indian currency in the long run. A currency can be termed ‘international’ if it is widely accepted worldwide as a medium of exchange.
India has so far been able to conduct rupee-denominated trade with a small number of nations and is working closely with many more to make it successful.
