RBI deals a blow against dollar dominance
There is a need for a means of settling international payments different from the dollar because the US government has weaponized the dollar
The immediate impact of the Reserve Bank of India’s decision to permit settlement of international trade payments in rupees might be to facilitate ongoing trade with Russia and open a window for Sri Lanka to import desperately needed fuel, food and medicines from India on the strength of a rupee line of credit that India could offer. In the longer run, it is one more step towards, one, the use of the rupee as a global currency, and, two, diversification of the settlement of global payments away from the US dollar. It is a welcome move that speaks of India’s confidence that its overall foreign exchange earnings and reserves are large enough to afford the luxury of allowing some exports that do not earn foreign exchange.