Curated By: Business Desk
Last Updated: August 01, 2023, 12:24 IST
For the fiscal year 2022-23, the Reserve Bank had to sell a total of $213 billion in foreign currency.
India prepared to use the Indian currency in International trading last year to promote the rupee.
The Reserve Bank of India’s (RBI) Inter-Departmental Group (IDG) has expressed its belief that the Indian rupee possesses the potential to evolve into a worldwide currency. This comes as India continues to register economic growth and displays resilience in the face of significant challenges.
The previous year proved to be a crucial one for the Indian economy, with the global commodity market facing severe disruptions due to the war between Russia and Ukraine. The resultant pressure on the Indian currency saw the rupee crossing the 80-dollar mark for the first time. However, the Reserve Bank had devised a comprehensive plan to alleviate this pressure, which is now showing slow but steady progress.
One of the measures taken to relieve the pressure on the rupee was the announcement of trading in foreign markets using the Indian currency. Since then, efforts in this direction have been ongoing, and some progress has been made. But, foreign trading using the rupee has not yet materialized. Consequently, the plan is undergoing modifications. As per a senior official familiar with the situation, the RBI is actively establishing bilateral agreements with several nations. This move is expected to pave the way for the rupee’s acceptance in international trade.
The Reserve Bank has been diligently working to reduce the pressure on the Indian rupee in foreign exchange markets. To counter the rupee’s depreciation, a record $39 billion (approximately Rs 2.8 lakh crore) worth of foreign currency was sold in July. For the fiscal year 2022-23, the Reserve Bank had to sell a total of $213 billion (almost Rs 17 lakh crore) in foreign currency. In light of these unfavourable circumstances, the RBI chose to interact with overseas markets using the rupee and implemented a flawless strategy by releasing digital currency. The impact of this decision does not appear to be entirely positive as of yet.
The road to transforming the rupee into a globally recognized currency may be challenging, but India’s strong economic growth and resilient spirit make it a feasible endeavour. As the country emerges as one of the fastest-growing economies globally, its potential to establish the rupee as an international currency becomes more promising.
While the RBI’s efforts to promote foreign trading using the rupee are ongoing, the modifications being made through bilateral agreements with other nations show the determination to overcome obstacles. It is crucial to strike a balance between measures to bolster the rupee’s standing and careful consideration of the economic landscape.
The RBI’s unwavering commitment to its plans indicates the central bank’s dedication to strengthening the Indian economy’s foundations. As India continues its journey of economic growth and global influence, the possibility of the rupee gaining prominence as an international currency remains within reach.
