According to an announcement issued by the Reserve Bank of India on the 11th, India has established a new rupee settlement mechanism for India's import and export trade .
Prior to this, India used U.S. dollars to settle import and export trade. With this move, it is difficult for people to suspect that India wants to "shake" the status of the U.S. dollar in the international community.
After the United States took the lead and Western and European countries began to impose economic sanctions on Russia, Russia launched a mechanism to settle import and export trade with rubles and . Now, India has also made such a move. It seems that the de-dollarization process around the world has begun, and India has become a "new general" in this process.
As for establishing a new settlement mechanism, India has not only figured out how to do it, but has even announced the specific operation methods of this mechanism.
According to information released by the Reserve Bank of India, the Indian government will allow any authorized primary dealer bank to conduct trade settlements in rupees with partners from other countries in this mechanism.
Moreover, in order to facilitate the settlement of import and export projects in rupees, Indian dealer banks can also open special Vostro accounts at their partner's correspondent banks. Once the two parties want to conduct trade transactions, they can settle through this account. Of course, the currency in the account is only rupees.
In other words, the Reserve Bank of India fixed the trade settlement method between India and other countries in rupees, and also fixed the transaction accounts of both parties in Vostro. In this way, India and its partners in other countries no longer need to settle through the international settlement system, and only need to pay out or receive the rupees in this new account.
If this settlement mechanism is put into use, then countries that want to trade with India will have to open a new account to store rupees. The US dollar's presence in international trade will become weaker.
Why is India doing this?
According to the president of the Federation of Indian Export Organizations (FIEO), India is recognizing the status of the rupee as an international currency.
However, some analysts believe that India is not "acknowledging" this matter, but is simply "emphasizing" the status of the rupee in international trade and trying to expand its influence.
However, judging from the fact that the rupee has fallen by 7% against the US dollar this year, the "depreciation" of the rupee is not a good thing. Therefore, the Indian government has to make some changes to "recover" the rupee's influence in international trade.
Not only that, Rahul Bajoria, chief India economist at Barclays Bank, also analyzed another meaning of the Indian government's move, which is that it can reduce Indian banks' demand for foreign exchange. Because if Indian dealer banks settle with partners in other countries only in rupees, then neither US dollars nor euros will be considered by Indian traders. We can conduct trade smoothly using one currency, the rupee.
At the same time, India's move will also allow the rupee to be used in more trade scenarios, thereby "stabilizing" or "improving" the rupee's status in the international currency.
Of course, judging from the fact that India still purchases Russian coal even after the United States and other Western countries called for sanctions on Russia, India's move may not only speed up the global de-dollarization process, but also make it easier to trade with Russia, thereby weakening the United States and other countries. The "effect" of Western countries' sanctions on Russia.
According to Xinhua News Agency news, 75% of the energy used for power generation in India is coal, which also makes India the second largest coal consumer in the world.
Under this situation, Russian coal has become an important material that India cannot "give up". Therefore, when the United States and other countries were busy sanctioning Russia, even though India received a warning from the United States, it still chose to hoard coal from Russia in the early stages of the Russia-Ukraine conflict.
In March, India's coal imports from Russia accounted for 66% of its total annual coal demand. Moreover, India is also preparing to continue importing Russian coal and double this total.
Moreover, India also purchased a large amount of Russian oil during the same period.However, with such frequent trade exchanges between India and Russia, the United States and other countries have kicked Russia out of the SWIFT system , which makes trade settlement between India and Russia very inconvenient.
Although Russia has previously launched a mechanism to settle trade in rubles, for India, launching a new mechanism to settle trade in rupees may be more "beneficial" to the improvement of the rupee exchange rate .
First, Russia, and then India, these countries have switched to using their own currencies for settlement. This has not only "hampered" the West's sanctions on Russia, but may also have invisibly accelerated the process of global de-dollarization. The status is worrying.
