These three steps by the RBI will now increase the dominance of the Indian rupee in international trade!

Indian Currency in International Trade: To promote the use of the Indian currency in international trade, RBI Governor Sanjay Malhotra said that transparent reference rates will be established for the currencies of India's major trading partners.

Indian Rupee in International Trade: The dominance of the Indian rupee will now be seen increasing in international trade. The RBI announced steps in this direction after a three-day Monetary Policy Committee meeting. The aim is to reduce dependence on foreign currencies. Under this, authorized banks have been allowed to provide loans in Indian rupees to non-resident citizens of Bhutan, Nepal, and Sri Lanka for bilateral trade.

Indian Currency's Dominance

To promote the use of the Indian currency in international trade, RBI Governor Sanjay Malhotra said that transparent reference rates will be established for the currencies of India's major trading partners. Additionally, the wider use of the Special Rupee Vostro Account (SRVA) has been permitted to encourage investment in corporate bonds and commercial papers in Indian rupees.

Reducing Dependence on Foreign Currency

SRVA is an account opened by a foreign bank with an Indian bank that facilitates international trade settlements directly in Indian Rupees (INR). This will help reduce dependence on the US dollar and protect the economy from exchange rate fluctuations and currency crises. Such measures will help control the current account deficit by reducing dependence on foreign currency. The RBI Governor stated that India's external sector is strong and the central bank is closely monitoring rupee movements and is prepared to take appropriate action if needed.

While the three-day meeting of the RBI's Monetary Policy Committee decided to keep the repo rate unchanged for the second consecutive time, in his forecast, Central Bank Governor Sanjay Malhotra raised the country's GDP growth from 6.5 percent to 6.8 percent. Additionally, inflation is projected to be 2.6 percent, 1.8 percent in the second quarter, 1.8 percent in the third quarter, and 4.0 percent in the fourth quarter. It is projected to reach 4.5 percent in the first quarter of 2026-27.