Skip to main content

India and Malaysia can now use rupee to settle trade

India and Malaysia can now use the Indian rupee to settle trade addition to other currencies, the Ministry of External Affairs said on Saturday. The move follows the decision by the Reserve Bank of India in July last year to allow settlement of international trade in Indian currency. The MEA said the

 RBI's initiative is aimed at facilitating the growth of trade an supporting the interests of the global trading community in the Indian rupee. "India International Bank of Malaysia (IIBM), based in Kuala Lumpur , ahs operationalized this mechanism by opening a special Rupee Vostro account through its corresponding bank in India that is Union Bank of India."


What is a Vostro Account?

Vostro accounts are used to make payments in domestic currency. The opening of this account will allow Malaysia to use the Indian Rupee to settle trade payments. This move is expected to benefit both India and Malaysia. It will eliminate the need for foreign exchange conversion and will reduce transaction costs. This development is also expected to lead to especially to lead to increase trade between the two countries especially in areas such as Textiles, automobiles and electronics.


What is De-dollarization?

De-dollarization is a process of substituting the US dollar as the currency used for:
Trading oil and/ or other commodities
  • Buying US dollar for the forex reserve 
  • Bilateral trade agreements 
  • Dollar-dominated assets
It happens when the central bank of the country diversify their reserves away from the USD to other assets or currencies like the Euro, Renminbi, Rupee or gold. The USD has been the world's dominant
 currency since the conclusion of the second world war. Since then it has been the most sought currency for decades, which means it is held by central banks across the globe in significant quantity. This unique ability not only makes the US the leader in the financial and monetary system, but also provides incomparable leverage when it comes to coercive ability to shape decisions taken by governments, businesses, and  institutions.


What is the cause of this shift?

The Ukraine was played a very important role for this decision as oil prices rose all across the world. The price rise and also the food shortage create an environment for the decision to de-dollarize their
 economy. The US has used this leverage for a very long time, they have imposed sanctions on regimes and states to achieve their foreign policy goals. After the US-China trade war, China started the process of discussing the possibility of using yuan in the trade with countries.     

Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

US-India Jet Engine Deal: A Boost for Both Countries

  US-India Jet Engine Agreement: A Boost for Both Countries The United States and India are close to finalizing an agreement to jointly manufacture fighter jet engines in India. The deal, which would involve General Electric (GE) partnering with state-owned Hindustan Aeronautics Limited (HAL), is seen as a significant step forward in India’s efforts to develop a domestic defence industrial base. Currently, India relies on imports for most of its fighter jet engines. The deal would allow India to produce advanced jet engines, which would give it greater self-reliance in the defence sector. It would also strengthen India’s strategic partnership with the US. The deal is still in the early stages of negotiations, but if it is successful, it would be a major boost for both countries. For the US, the deal would help to secure a long-term customer for its advanced jet engine technology. For India, the deal would help to meet its growing demand for fighter jets and would give it a more sec...
Post a Comment
Read more

Trump indicted again.

Former President Donald Trump Arrested on Charges of Treason and Sedition On June 15, 2023, former President Donald Trump was arrested by federal agents on charges of treason and sedition. Trump is accused of conspiring with foreign powers to interfere in the 2020 presidential election and of inciting the January 6th insurrection at the U.S. Capitol. The arrest of a former U.S. president is unprecedented. Trump is the first person to hold the highest office in the land to be arrested and charged with a crime. The charges against Trump are serious, and if convicted, he could face life in prison. The arrest of Donald Trump is a major development in American history. It is a sign that the U.S. justice system is capable of holding even the most powerful people accountable for their crimes. It is also a sign that the country is committed to democracy and the rule of law. The Investigation The investigation that led to Trump's arrest began in the days after the January 6th insurrection. ...
Post a Comment
Read more
 Introduction: China's nuclear arsenal is growing at an alarming rate. The Stockholm International Peace Research Institute (SIPRI) reported in June 2023 that China's nuclear arsenal grew by 17% in 2022, to an estimated 410 warheads. This is the largest annual increase in China's nuclear arsenal since 1964. The Pentagon has warned that China could have 1,500 nuclear warheads by 2035. The G7 leaders have warned that China's nuclear build-up is a threat to global stability. Body: There are several reasons why China is rapidly expanding its nuclear arsenal. One reason is that China is concerned about the rise of the United States as a military power in the Asia-Pacific region. China sees the United States as a potential threat to its security, and it is therefore seeking to deter a US attack. Another reason for China's nuclear build-up is that China is concerned about the nuclear capabilities of its neighbors, such as India and Russia. China wants to ensure that it has...
Post a Comment
Read more