India, on the other hand, is yet to recognise the soft power of making the INR an international currency. It is aimed to become a major currency in the local region, in Asia and then globally. The renminbi is being used for trade with Vietnam, Myanmar, Laos, Central Asian Republics and so on. Even though capital controls of China are discouraging the use of its currency, the People’s Bank of China is still trying. The renminbi has officially become a reserve currency. It encourages its trading partners to use its currency especially for denominating trade.Īlso read: Nepal wants RBI to declare Rs 200, Rs 500 & Rs 2,000 currency notes as legal tenderĬhina has made its currency part of the IMF’s Special Drawing Rights (SDR) basket. Since 2010, China has been actively trying to push for renminbi internationalisation. The US even threatens to use its power from use of the dollar internationally to impose sanctions on countries such as Iran.Ĭountries like those in Europe, which have a lot of active trade in the region, saw the advantages of having a common currency with their trading partners and created the Euro. It does not need to worry about foreign currency exposure, or the change in the exchange rate hitting trade and debt. The US does not have to worry about current account deficits. The dollar as the currency of trade, store of value and central bank reserves all over the world offers many advantages to the US. The RBI should agree.Įighty per cent of the world’s trade takes place in dollars. Considering the demand from people engaged in the trade and tourism links between the two countries, Nepal has now requested the Reserve Bank of India (RBI) to allow the use of higher denomination rupee notes in Nepal. Of the two countries which had adopted the INR as legal tender, Nepal and Bhutan, one had to ban the use of notes above Rs 100 as legal tender. While China is actively pursuing a policy of Renminbi internationalisation, India appears to be on the path of de-internationalisation of the Indian rupee (INR). We must look North-and see the rise of the renminbi.
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