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NEW DELHI: India is seeking to devise a mechanism to hedge exchange rate risk in a proposed rupee-based trade with the United Arab Emirates to limit losses for exporters, an Indian official told reporters on Thursday.
Representatives from India and the United Arab Emirates are likely to meet in May to review progress on their comprehensive economic partnership agreement and discuss payments in rupee trade settlements, which have yet to be initiated, the official said, speaking on condition of anonymity. was taken.
The South Asian country has been trying to internationalize the rupee to reduce demand for dollars and insulate its economy from global shocks. India had earlier said that apart from Russia, African countries, the Gulf region, Sri Lanka and Bangladesh were also keen to trade in their own currencies.
central bank India and the UAE Options to minimize risks from rupee fluctuations may be considered, the official said.
While the rupee settlement is a new initiative and faces nascent issues with the exchange rate mechanism, some “isolated” transactions have taken place, Foreign Trade Director-General Santosh Kumar Sarangi said last month.
The RBI announced plans to settle international trade in local currencies last year. It will allow importers to pay in rupees and the payment will be credited to a special account of the correspondent bank of the partner country, while exporters will be paid from the balance of the designated special account.
Representatives from India and the United Arab Emirates are likely to meet in May to review progress on their comprehensive economic partnership agreement and discuss payments in rupee trade settlements, which have yet to be initiated, the official said, speaking on condition of anonymity. was taken.
The South Asian country has been trying to internationalize the rupee to reduce demand for dollars and insulate its economy from global shocks. India had earlier said that apart from Russia, African countries, the Gulf region, Sri Lanka and Bangladesh were also keen to trade in their own currencies.
central bank India and the UAE Options to minimize risks from rupee fluctuations may be considered, the official said.
While the rupee settlement is a new initiative and faces nascent issues with the exchange rate mechanism, some “isolated” transactions have taken place, Foreign Trade Director-General Santosh Kumar Sarangi said last month.
The RBI announced plans to settle international trade in local currencies last year. It will allow importers to pay in rupees and the payment will be credited to a special account of the correspondent bank of the partner country, while exporters will be paid from the balance of the designated special account.
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