Using a rupee route to get around a dominating dollar
A number of countries, including India, are now considering the use of other currencies to avoid the U.S. dollar and its hegemonic role in settling international transactions.
The present scenario
- Using rupee as settlement of payments- India has been taking an active interest in having the rupee used for trade and the settlement of payments with other countries, which include Russia, now facing sanctions.
- Mode of settlement with Russia- Settling payments with Russia by India, especially for mineral fuels and oil imports as well as for the S-400 Triumf air defence system has been continuing on a semi-informal basis through rupee payments by using the Vostro accounts maintained by Russian banks in India.
- Advantage of RBI’s circular- The current RBI’S circular aims to operationalise the special Vostro accounts with Russian banks in India, in a bid to promote trade and also gain a better status for the rupee as an international currency.