Non-resident Indians will able to use UPI. UPI allows money transfers now. 2023’s start couldn’t be better, but India is working on another method. There’s a plan to make UPI and our rupee worldwide. The Indian rupee needs internationalisation today. Today’s Blog will explain how a currency becomes an international currency. If you enjoy this blog, please tell your friends.
Part 1: International Currency?
A few days ago, our friends in Egypt and needed Egyptian pounds to pay in a restaurant. The waiter answered, “If you have US dollars, that’s great too.” Every business there was willing to sell us products with US dollars. They prefer the US dollar over their own currency. Why? Because USD is an international currency and other currencies have worth too. International currencies are used for international commerce. Actively Traded Currency You’ve heard that before money, people used the “barter system”: I’d produce vegetables on my farm and trade them for grain, but it had numerous drawbacks. Thus, money was created. This document also exchanges “trust.” In that sense, I can print a sheet of paper and put any amount on it, but only I will believe it, and does it matter whether I do? A currency’s worth depends on how many merchants trust it. Currency is nothing without faith. In today’s world, India imports tea from Sri Lanka. Sri Lanka buys sugar from China. Sri Lanka will take payment in a currency that China will accept later, or they’ll simply have Gandhi photos they can’t use. Colonization After the Bretton woods agreement in 1944, all major nations agreed that the US dollar would become a standard international currency. Oil powers civilization. In 1973, America persuaded OPEC to adopt dollars. This event made America a superpower. Today, the US dollar, Euro, Japanese Yen, British Pound Chinese Yuan is also an international currency. Apart from their nation other nations cherish their money.
Part 2: Rupee requires internationalisation You’ve probably heard that India’s foreign reserves are at their lowest. The RBI sells dollars from its reserves to boost supply and decrease the dollar’s rate when it rises. The RBI spent around $40 billion stabilising the Rupee in 2022. Today, India is a net importer, meaning we pay in dollars for all our imports. Trade deficit is this import-export difference. In October alone, our trade deficit reached $26.91 billion. No matter how many “Atmanirbhar Bharat” slogans we shout, our imports won’t reduce, and the dollar’s price will only rise. But there is hope.
Part 3: Indian Rupee Hope
We analysed India’s trade statistics from the previous five years and found 154 nations with whom India’s exports exceed its imports. Countries like China would never agree to trade in rupee, but Bangladesh and Sri Lanka have consented. If Sri Lanka doesn’t have dollars today, it may pay with Indian rupees. America has also sanctioned Russia, preventing dollar transactions. Sri Lankan currency fell 84% against the dollar and 70% against the Indian rupee. For them, rupees are cheaper than dollars.
America regulates and monitors every dollar spent abroad. After the Russia-Ukraine crisis, Russia and China boosted their Yuan trade. In Russia’s case, India and Russia may trade in rupees. India will profit, but two other nations will benefit more. Sri Lanka and Russia cannot trade in dollars. Let’s imagine B is an Indian vehicle salesman. Who imports A cars? France’s dealer? B will pay using Indian rupees at his bank. Indian bank will pay foreign bank in Euros. Then the foreign bank transfers euros to France’s dealer ‘A’ and ships the autos to India. RBI has begun to alter this. Vostro accounts French banks may open SBI Vostro accounts in Indian Rupees for commerce. When Indian dealer B imports automobiles from France, he pays in rupees, not euros, at SBI, not a foreign bank. What will they do with Indian rupees in this French vostro account? France may spend vostro rupees on Indian exporters. By purchasing their products, Indian exporters will be paid in rupees solely, keeping Indian money in India. Planned. 35 nations trade in rupees now. If India achieves this, it would be its largest international triumph this decade.
Part 4: Real struggle
Convincing Russia and Sri Lanka is doable and effort is underway. Who is hard to persuade? Saudi UAE Because UAE-India commerce is completed in the financial year. $12 billion surplus India-Saudi $20 billion excess In plain terms, we gave them tomatoes and wheat, and we purchased additional wheat for $12 billion and $20 billion from them. Since these payments are in dollars, they may spend these dollars elsewhere, give them to any other nation, invest anyplace else, and buy assets from them. What’s the use of keeping this extra money in Rupees? India has a major issue. To lower our trade imbalance, RBI and government must make major policy reforms. We need to boost exports. Rupee usage: We must consider incentivizing foreign Rupee investors in India. It’s too difficult for this video, so we’ll explain it in another.
Part 5: So easy?
Why doesn’t India act if a 5–10-minute film can explain everything? Talking is simple, but doing is hard. Take China’s example. Since 2009, China has lowered Just 2% of US currency US dollars are weapons. US FED, America’s central bank, controls how US dollars may be spent worldwide. If they sanction India tomorrow, we can’t purchase oil in dollars. We will acquire more dollars to pay other nations in dollars when oil prices rise. Dollar is Rs. 82 today. Experts estimate 90–100. India may commit this. One huge error is not taking timely action. If you learned anything from this video, share it with your friends. The globe is in an economic crisis. Since 2020, when will it end? Pakistan and Sri Lanka are unknown. India’s economy is also under strain. Time will tell, but sharing this essential message with you matters to me.
