{"id":252377,"date":"2023-07-17T19:47:20","date_gmt":"2023-07-17T14:17:20","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=252377"},"modified":"2023-07-17T19:47:20","modified_gmt":"2023-07-17T14:17:20","slug":"how-india-and-uae-are-planning-to-promote-use-of-local-currencies-for-cross-border-transactions","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/how-india-and-uae-are-planning-to-promote-use-of-local-currencies-for-cross-border-transactions\/","title":{"rendered":"How India and UAE are planning to promote use of local currencies for cross-border transactions"},"content":{"rendered":"\n

Source: <\/b>The post is based on the articl<\/span>e \u201c<\/b>How India and UAE are planning to promote use of local currencies for cross-border transactions<\/b>\u201d <\/b>published in<\/span> Indian Express <\/b>on <\/b>15th July 2023<\/b><\/p>\n

What is the News?<\/b><\/h2>\n

India and the United Arab Emirates (UAE) have signed a pact to establish a framework to promote the use of the rupee and UAE Dirham (AED) for cross-border transactions.<\/span><\/p>\n

What is the mechanism being setup by India and UAE to promote use of local currencies for cross-border transactions?<\/b><\/h2>\n

The mechanism for the use of local currencies for transactions between India and the UAE aims to put in place a Local Currency Settlement System (LCSS).<\/span><\/p>\n

This system would enable exporters and importers to invoice and pay in their respective domestic currencies.<\/span><\/p>\n

India is likely to use this mechanism to pay for crude oil as well as other imports from the UAE, which is currently made in US dollars.<\/span><\/p>\n

Note:<\/b> Bilateral trade between India and the UAE was around $85 billion in FY23.India is also the third largest oil importer in the world and the UAE was its fourth biggest supplier of crude.<\/span><\/p>\n

What are the expected benefits of this mechanism?<\/b><\/h2>\n

Firstly, <\/b>it would enable the development of an INR-AED foreign exchange market.<\/span><\/p>\n

Secondly,<\/b> this arrangement would also promote investments and remittances between the two countries.<\/span><\/p>\n

Thirdly, <\/b>the use of local currencies would optimize transaction costs and settlement time for transactions, including for remittances from Indians residing in the UAE.<\/span><\/p>\n

Why has India signed this mechanism with the UAE?<\/b><\/h2>\n

The move to ink the pact with the UAE is part of a concerted policy effort by India to internationalize the rupee to bring down the dollar demand as a means to insulate the domestic economy from global shocks.\u00a0<\/span><\/p>\n

Government officials had earlier indicated that apart from Russia, countries in Africa, the Gulf region, Sri Lanka and Bangladesh had also expressed interest in trading in rupee terms.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201cHow India and UAE are planning to promote use of local currencies for cross-border transactions\u201d published in Indian Express on 15th July 2023 What is the News? India and the United Arab Emirates (UAE) have signed a pact to establish a framework to promote the use of… Continue reading How India and UAE are planning to promote use of local currencies for cross-border transactions<\/span><\/a><\/p>\n","protected":false},"author":10317,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,164,9],"tags":[10500],"class_list":["post-252377","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-international-relations-daily-factly-articles","category-public","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":4,"cached_at":"","cached_date":1698460478},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/252377","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10317"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=252377"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/252377\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=252377"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=252377"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=252377"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}