India, UAE agree to trade in local currencies
India and the United Arab Emirates have agreed to use their local currencies for cross-border transactions, amid attempts by Prime Minister Narendra Modi to increase the rupee’s role on the global stage.
The Reserve Bank of India said in a statement on Saturday that Modi and the central bank’s Governor Shaktikanta Das inked the agreements with the UAE’s President Sheikh Mohammed Bin Zayed Al Nahyan in Abu Dhabi.
The two memorandum of understanding will facilitate “seamless cross-border transactions and payments, and foster greater economic cooperation between the two countries,” it said, according to Bloomberg.
India has been trying to promote cross-border transactions in local currencies and reduce dependence on the US dollar.
The new development is also part of the global drive toward de-dollarization and using national currencies instead of the dollar.
Last month, US Treasury Secretary Janet Yellen acknowledged a gradual decline in the dollar’s share of the global reserve, as the global de-dollarization move gains momentum.
“We should expect over time a gradually increased share of other assets in reserve holdings of countries — a natural desire to diversify,” she said.