Asia House’s Post

Thanks AGBI - Arabian Gulf Business Insight for highlighting this important development and quoting our research on UAE-India trade. As the Gulf-Asia trade and investment corridor grows and strenthens we can expect more deals to encourage the use of local currencies in facilitating #trade. Interesting article by Chris Hamill-Stewart

RBI Revamps Forex Act 'FEMA' Guidelines to Boost Overseas Trade The Reserve Bank of India (RBI) has decided to rationalize #export and import guidelines to facilitate overseas trade. The rationalisation of #FEMA guidelines will provide these banks with greater operational flexibility, thereby enabling them to better serve their customers and contribute more effectively to India's overseas trade. The RBI's move is also expected to have a positive impact on the overall #crossbordertrade environment in India. By simplifying procedures and promoting ease of doing business, the RBI is making India a more attractive destination for #internationaltrade. This is likely to attract more foreign #investment into the country, thereby boosting #economic #growth. https://lnkd.in/gUkfDHQe

"India and Myanmar pioneered a new bilateral trade payment system as the Yangon office of Punjab National Bank on Tuesday completed the first transaction exceeding Rs 1 crore [approx. US120K] for a shipment of pulses under the Rupee-Kyat Settlement Mechanism." "Banks from several countries have opened special Rupee Vostro accounts in Indian banks to trade in local currencies. Simply put, Vostro accounts enable domestic banks to provide international banking services to clients who have global banking needs." https://lnkd.in/gqZgVDXF #india #myanmar #worldtrade #digitalfinance #technologynews

Currency multipolarity catch-up: India and UAE executed an agreement in mid 2023 to enable direct national currency (Rupee-Dirham) settlement of cross border trade. A multitude of commodities have since been exchanged via this mechanism. #india #uae #rupee #dirham #currencymultipolarity

What was not highlighted was that #trade surplus, the bit that #Malaysia gets to keep for itself, went down 52% yoy. #economics #finance #manufacturing #industry #funds #Fed #BNM #ECB #EBRD #IBRD #IMF #AMRO #SAFE #PBOC #BOJ #Bundesbank #business https://lnkd.in/gkU9gYP5

#crossborderpayments : The Reserve Bank of India (RBI) and Bank Indonesia have entered into a Memorandum of Understanding (MoU) aimed at encouraging the utilization of domestic currencies for bilateral transactions. The agreement outlines a cooperative framework for cross-border transactions in domestic currencies between India and Indonesia, aiming to boost the bilateral use of INR and IDR. It encompasses all current account transactions, approved capital account transactions, and other economic and financial transactions as mutually decided. By facilitating invoicing and #payment in their own currencies, the framework facilitates the establishment of an INR-IDR forex market, ultimately streamlining transaction costs and settlement times. In June 2023, the Reserve Bank of India and the Central Bank of the UAE inked two Memorandums of Understanding (MoUs) aimed at (i) establishing a Framework to Encourage the Use of Domestic Currencies for Cross-border Transactions and (ii) fostering cooperation to integrate their payment and messaging systems. The MoU regarding the establishment of a framework for local currency usage in transactions between India and the UAE seeks to implement a Local Currency Settlement System (LCSS) to facilitate bilateral use of INR and AED. It encompasses all current account transactions and permitted capital account transactions. The implementation of LCSS would empower exporters and importers to invoice and transact in their respective domestic currencies, thus fostering the growth of an INR-AED foreign exchange market. Additionally, this initiative would bolster investments and remittances between the two nations. Utilizing local currencies would streamline transaction costs and settlement times, including for remittances from Indian expatriates residing in the UAE. During the fiscal year 2022-23, the bilateral trade between India and the UAE reached unprecedented levels. The trade volume surged from US$ 72.9 billion (April 2021 to March 2022) to US$ 84.5 billion (April 2022 to March 2023), marking a notable year-on-year growth of 16%. Do you see the possibility of more such arrangements among BRICS nations? Share your views in comments. EmpowerEdge Ventures

Bangladesh and India on July 11 rolled out the cross-border trade settlement in the rupee to cut the dependence on the US dollar, but transaction figures illustrate a dearth of interest in carrying out businesses in the Indian currency. #currency #bangladesh #india #businessnews

RBI Allows Additional Rupee Vostro Accounts To Settle Import Trade. Vostro account is what foreign banks maintain with Indian banks to pay/ receive funds in INR for any import/ export transaction/ remittance on behalf of their clients.If India for example imports oil from Saudi Arabia or UAE or Russia and they happen to accept some payment in INR then that INR will be credited to the Indian bank of UAE . UAE can use that INR to invest in India ( if allowed) or import goods from India which can be paid out of this INR account and basically net settled.This completely bypasses the need to first obtain USD to make the payment to any oil exporter.This is a good step in internationalizing INR.#RBI #Vostro #Rupee #Import

Sri Lanka among other countries want to start rupee trade with India – Minister Part 2 India has started trade in the rupee with neighbouring countries, including Nepal and Bhutan. The rupee trade mechanism has been initiated to facilitate trade in national currency with Russia, while Sri Lanka has included the rupee in its list of designated foreign currencies. India’s first-ever payment in rupees for crude oil purchased was from the UAE and that is helping the world’s third largest energy consumer to push for taking the local currency global, as it looks for similar deals with other suppliers. Changes have been made in the FTP (Foreign Trade Policy) to allow international trade settlement in Indian Rupee with a view to making INR a global currency. In July 2022, the Reserve Bank of India (RBI) decided to allow the settlement of India’s international trade in rupee. Accordingly, authorised Indian banks are permitted to open and maintain special rupee Vostro accounts of the partner trading country’s banks. These accounts keep the foreign bank’s holdings in the Indian counterpart in rupees. When an Indian trader wants to make a payment to a foreign trader in rupees, the amount will be credited to this Vostro account. Similarly, in the reverse scenario, the amount to be paid to an Indian trader is deducted from the Vostro account, and credited to the person’s regular account. Several banks, including HDFC Bank and UCO Bank, have opened special Vostro accounts to facilitate overseas trade in the rupee and many countries have expressed interest to have this arrangement for the local currency trade. Source – PTI - Agencies Source: https://lnkd.in/g2c4Prq5 #IndianRupee #FinanceInsights #FinanceNews

African Export-Import Bank African Export-Import Bank (Afreximbank) has signed an agreement to avail a Project Preparation Facility in favour of the Government of the Commonwealth of The Bahamas to develop and implement an Afro-Caribbean Marketplace. Once implemented, the Afro-Caribbean Marketplace will comprise 90 outlets dedicated to the sale of authentically African and Caribbean products from more than 54 African countries, 20 Caribbean states, 16 islands of the Bahamas and a transshipment hub to be located at the grounds of the former International Bazaar and Royal Oasis Tower and Casino in Freeport, Grand Bahama Island. When completed, the project is expected to transform Grand Bahama into a major trade and cultural hub, enhance The Bahamas’ strategic position in global maritime networks, foster economic growth, create jobs, and strengthen ties between African and Caribbean nations. The marketplace will boost SME growth, and foster cultural exchange, thereby contributing to the overall economic and social development of The Bahamas. The project preparation facility of US$ 1.86 million will fund essential pre-development activities that will advance the project to bankability, whereupon this is expected to unlock further investments estimated at US$ 50 million. Extolling the impact of the facility, Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank Group stated: “Afreximbank is very pleased to be providing funding towards the development of a unique Afro-Caribbean marketplace and trans-shipment project in the Bahamas. It is a strategic investment that allows us to realise our vision of positioning the Caribbean as the trans-shipment hub for Africa’s trade with the Americas. It will also support logistics related to AfriCaribbean trade. The Bank commends the Government of the Bahamas for the bold initiative to harness the emerging Afri-Caribbean opportunities”