3 countries, including an Arab country, may benefit from paying in “rupees” in trade exchange with India
Indian Commerce Minister Sunil Parthwal said his country is offering the rupee as an alternative in trade dealings to countries facing a dollar shortage, following the US Federal Reserve’s strongest monetary tightening campaign in decades.
The minister said on Friday that dealing in the rupee would help protect countries suffering from a currency crisis from “disasters”.
Sri Lanka, Bangladesh and Egypt are facing a dollar shortage and have shown interest in trading in the Indian currency, an Indian government official said, according to Bloomberg.
A dollar shortage played a role in forcing Sri Lanka to default on its debt last year, while Bangladesh recently took out a loan from the International Monetary Fund to shore up its own reserves.
Egypt has sharply devalued its currency three times since the Russian invasion of Ukraine exposed weaknesses in its public finances, amid a lack of foreign inflows.
India is trying to internationalize the rupee to reduce demand for the dollar and insulate its economy from global shocks. Officials have previously said that besides Russia, countries in Africa and the Gulf region are also keen to do business with India in their local currency.