To enhance international trade while emphasizing exports of goods from India, the Reserve Bank of India has announced specific measures to settle international transactions in Indian rupees.
RBI said in its official release, “In order to promote the growth of global trade with emphasis on exports from India and to support the rising interest of the global trading community in rupee, and it has been decided that to keep in place an additional arrangement for invoicing, payment, and settlement of exports/imports in rupee.”
Specifically, under this arrangement, all exports and imports may be denominated and invoiced in the Indian rupee. However, to put the mechanism in place, the banks will require prior approval from the foreign exchange department of RBI, said in the circular.
It will also convey the issues related to exchange rate, invoicing, and settlements. The market may also determine the exchange rate between two currencies. The circular further said that the surplus balance rupee could be used by mutual agreement for legitimate capital and current account transactions.
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