As the world becomes more interconnected, currencies from different countries are beginning to interact more closely. The Indian Rupee (INR) is increasingly stepping beyond its national boundaries, becoming part of this global currency landscape. Recently, there have been significant developments—such as establishing special bank accounts in rupees and engaging in oil trades using rupees instead of dollars. Let’s explore this journey in detail.
In July 2022, the Reserve Bank of India (RBI) authorized 60 banks across 18 countries to set up special bank accounts that operate in rupees. This pivotal move marked the beginning of a broader initiative to enable the Indian currency to facilitate international trade settlements, generating discussions about the rupee's potential to gain wider acceptance globally.
To enhance trading efficiency between nations, India has been forming agreements to utilize local currencies instead of relying solely on the US dollar. A notable early step in this direction was India's agreement with the United Arab Emirates (UAE). Let’s take a closer look at this developing partnership.
This marks the beginning of the Indian Rupee's journey to establish a more prominent role on the global stage. With each initiative, new avenues for trade and investment open up, reshaping our understanding of currency and economic interactions. It will be interesting to observe how the rupee continues to assert itself in the international arena.
Q1. How is the Indian Rupee being used internationally?
Answer: The Indian Rupee is increasingly used in international trade through special bank accounts approved by the RBI, allowing settlements in rupees instead of relying solely on the US dollar.
Q2. What are special rupee accounts?
Answer: Special rupee accounts are bank accounts set up in various countries that allow for the settlement of international trades directly in Indian Rupees, facilitating smoother transactions.
Q3. Which countries have approved special rupee accounts?
Answer: Countries such as Germany, Russia, and the UK have been authorized by the RBI to establish special accounts to conduct trade in rupees.
Q4. Why is India pursuing local currency trade agreements?
Answer: India seeks to reduce dependence on the US dollar for international transactions, fostering economic relationships through local currencies, enhancing trade efficiency.
Q5. What was a significant transaction involving the Indian Rupee?
Answer: The Indian Oil Corporation made a notable purchase of oil from a UAE firm, paying in rupees rather than dollars, marking a significant step in rupee's global acceptance.
Question 1: What significant step did the RBI take in July 2022 regarding the Indian Rupee?
A) Allowed international banks to use dollars
B) Authorized banks to open special rupee accounts
C) Banned rupee transactions
D) Increased interest rates
Correct Answer: B
Question 2: Which countries were mentioned as having approved special rupee accounts?
A) USA and Canada
B) Germany and Russia
C) Brazil and Argentina
D) China and Japan
Correct Answer: B
Question 3: What was the major benefit of using local currencies in trade?
A) Higher costs
B) Increased dependence on dollar
C) Enhanced trade efficiency
D) Reduced transaction time
Correct Answer: C
Question 4: Which country did India sign a local currency trade agreement with?
A) USA
B) UAE
C) Japan
D) Australia
Correct Answer: B
Question 5: What was a significant oil transaction involving the Indian Rupee?
A) Payment in dollars
B) Payment in rupees by Indian Oil Corporation
C) Payment through barter
D) Payment through cryptocurrencies
Correct Answer: B
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