India to Facilitate International Settlements in Rupees – The Indian government is introducing alternative payment methods to the U.S. dollar for international trade. The new foreign trade policy guidance, which went into effect on April 1, provides a new option for settling payments in Indian rupees, allowing countries experiencing a dollar crisis to continue trading with India.
The purpose of the new instruction would be to assist countries like Sri Lanka, Bangladesh, and Egypt, which are having trouble obtaining U.S. dollars to continue trading with India. This action, according to Commerce Secretary Sunil Barthwal, would safeguard these countries from a possible dollar shortage.
This action is part of New Delhi’s efforts to promote its currency internationally. In this sense, the Department of Commerce of India stated that this new foreign trade policy plan was intended to “work towards making Indian Rupee a global currency, adding further impetus to India’s emergence as the global trading hub.”
India is the last in a line of countries that have initiated steps to move away from the use of U.S. dollars, at least for international transactions. China, a member of the BRICS grouping, which is also connected with India, Brazil, Russia, and South Africa, has promoted the adoption of the Chinese yuan as part of a global de-dollarization initiative.
Putin backed the use of the Chinese yuan to settle payments with growing economies in Asia, Africa, and Latin America during a discussion with Chinese President Xi Jinping and Russian President Vladimir Putin on March 21, amid Xi’s visit to Moscow. In addition, China has reached an agreement with the Brazilian government to replace the dollar with national currencies in bilateral transactions.
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Other blocs are also considering alternative strategies to lessen their dependence on the U.S. dollar. ASEAN, the Association of Southeast Asian Nations, a bloc comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, is pressuring its members to use national currencies for payments out of fear of secondary sanctions from the United States for not enforcing a trading ban on Russia.