Can Indian Rupee kill Dollar’s dominance

You might think that whenever you hear about money, wealth, or something related to money the first word you hear is a dollar, but did you think that why everywhere the dollar is used, in this blog we are going to know about why the dollar is dominating over all other currencies and can any currency dominate dollar.

Introduction

You all might know or not, but India is trying to lower its dependence on the dollar for our trade so that the Rupee can also be an international currency. You might ask what is wrong with the dependence on the Dollar and the answer is whenever the dollar becomes stronger than the rupee then it affects us resulting in high import bills, so we should trade in Rupees.

How to reduce the dependency

To reduce the dependency there is one direct way that we have to trade with Rupees for this reason India is in talks with smaller nations to trade with rupees. We have implemented with Russia, Bangladesh, Nepal, Sri Lanka, United Arab Emirates, and Saudi Arabia.

We are also in talks with African countries such as Zimbabwe, Ethiopia, and Sudan.

The reason

The main reason is that if you want to trade in dollars then you need a Nostro account, this account is used for both sending and receiving money here comes the change where India wants to trade in Rupees and use a Vostro account instead of a Nostro account which will lead to other country people to trade in rupees this will lead to reducing the dependence on the dollar.

A Nostro is a bank account that is kept by another institution, also known as a “foreign bank,” where we keep our funds when we are abroad.
A Vostro is an account we hold for money from other banks or “foreign banks” in your nation. A Vostro account is a record of the funds that a bank has on hand or that a third party owes the bank (A means to monitor how much of the bank’s funds are being kept by the other bank is through the Nostro account. This is comparable to someone keeping a thorough record of each payment into and out of their bank account, so they always know the balance.

Responsibilty

The Indian Economic Trade and NPCI are primarily engaged in such cross-border trade issues and the statement they released is ” We are engaging with a group of smaller countries which may be interested in bilateral trades via dedicated Vostro account”.

Conclusion

Cereals, plastic and sugar are part of country’s trade with Djibouti and if such transaction is dedicated in rupee account, then it will help us.

Similarly, we can trade with Ethiopia, Namibia, and Kenya we can directly settle in Indian rupees. It will help us to become self-reliable which will help us in our economic development because it will not matter to us how the dollar is performing in the market.