Rupee’s global role key to reducing India’s external risks: T Rabi Sankar

Synopsis

India's Deputy Governor T Rabi Sankar stated that the internationalisation of the Rupee has begun, with exporters increasingly invoicing in the local currency. This shift is crucial for India to achieve its developed economy ambitions and reduce global transaction risks.

Mumbai: The internationalisation of the Rupee has already commenced with exporters invoicing in the local currency, and it is likely to see a surge in the coming years as it becomes a primary vehicle to help India realise its ambition of a developed economy , central bank Deputy Governor T Rabi Sankar said Thursday at a media event in Mumbai.

"When your currency is not commonly used or acceptable for global cross-border trades, that does not happen," Rabi Sankar said, adding that India needs to create the right conditions. "The number of invoices in rupees is going up, but it is still quite low. But we believe that if you create conditions, eventually you will reach a situation where people start doing that."

He noted that it takes time for exporters and importers to shift their mindset and change invoicing practices. "One of the reasons advanced economies are what they are is because they can largely invoice in their own currencies. So, their businesses don't have to deal with that risk as much," he said.

He also said the Reserve Bank of India (RBI) believes the Indian economy and businesses will face less risk if global transactions are conducted in rupees, a principle that applies to every country.

Offering another reason for the rupee's internationalisation, he said over-dependence on a few currencies has led to currency crises.

"We believe that for a more stable global financial system, you should have an arrangement where multiple currencies play a global role, not one or a handful. So, from both these points of view, we decided that we should now start promoting rupee as a currency that can be used for cross-border transactions," he said.

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