The Reserve Bank of India announced this past Monday that trade denominated in rupees is now authorized. Trade carried out in rupees obviously facilitates trade with countries suffering under U.S. sanctions (Russia, Iran, Venezuela, etc.). But Professor N.R. Bhanumurthy, a prominent economist and Vice Chancellor of India’s Dr. B.R. Ambedkar School of Economics University (informally known as BASE University), emphasized in an interview with Sputnik news service that the decision will also allow India flexibility in responding to “shocks from the global financial system.”
If other countries, for example, run out of dollar reserves, trading in rupees offers them an option: “If the US dollar becomes too expensive, it creates trouble for countries with a forex crisis to trade. In that situation, countries with limited foreign exchange reserves can always explore rupee-denominated trade.”
