How RBI's STRATEGY will KILL the US DOLLAR dominance in the world economy? : Rupee Vs Dollar War
Think School・2 minutes read
The Reserve Bank of India issued a circular to promote international trade settlement in rupee, aiming to boost exports and enable trade with sanctioned countries like Russia. This move bypasses American banks, potentially opening new trade avenues with Russia, Iran, and Venezuela, impacting both economics and geopolitics.
Insights
- The Reserve Bank of India introduced a circular for international trade settlement in rupee, aiming to boost exports and facilitate trade with sanctioned countries, potentially increasing demand for the rupee.
- By allowing direct trade in Indian rupees with countries like Russia, Iran, and Venezuela, bypassing the U.S. dollar and SWIFT network, India's move challenges the dominance of the dollar, impacting both economic and geopolitical dynamics, while reducing dependence on dollars and easing exchange rate pressures.
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Recent questions
What prompted the Reserve Bank of India to issue a circular for international trade settlement in rupee?
The Reserve Bank of India issued a circular for international trade settlement in rupee to offer an alternative to trading without the U.S. dollar. This move aims to boost India's exports and facilitate trade with sanctioned countries, increasing the demand for the rupee.
How does allowing domestic traders to settle imports and exports in Indian rupees impact India's trade relations?
Allowing domestic traders to settle imports and exports in Indian rupees enables direct trade with countries like Russia, bypassing American banks. This move could open new trade avenues with Russia, Iran, and Venezuela, impacting both economics and geopolitics.
What challenges does the SWIFT system pose for international trade, as highlighted in the RBI's strategy?
Challenges with the SWIFT system include sanctions, freezing of funds, and high costs due to commissions, affecting global trade dynamics. The RBI's strategy aims to counter these challenges posed by U.S. sanctions, particularly after Russia's exclusion from the SWIFT network.
What advantages does the new system of international trade in Indian currency through Wastro accounts offer to India?
The new system allows international trade in Indian currency through Wastro accounts, enabling transactions between Indian and foreign entities. Advantages include trading with sanctioned countries like Russia, Iran, and Venezuela, reducing dependence on dollars and easing exchange rate pressures.
How might the move by the RBI to allow trade settlement in rupee challenge the dominance of the U.S. dollar?
The move by the RBI to allow trade settlement in rupee challenges the dominance of the U.S. dollar by potentially leading to backlash or sanctions, given India's significant bilateral trade with the U.S. This shift could impact global trade dynamics and the position of the U.S. dollar in international transactions.
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