BREAKING NEWS :
India Ditches the #Dollar ? RBI OKs Full-Rupee Settlements for #BRICS — A Quiet Coup for the INR
India’s central bank has quietly opened the door for BRICS and other partner countries to settle trade fully in rupees, no longer forcing them to use the US dollar as the default settlement currency. Reserve Bank of India issued a circular instructing banks to allow overseas firms to open Vostro accounts without prior RBI approval, so exporters and importers can transact directly in INR.
Why this matters:
Practical shift, big signal.Making bank-to-bank rupee settlements easier removes a key operational hurdle for cross-border trade in INR and could speed up the rupee’s international use.
Geopolitical context.Move follows fresh U.S. tariffs on India and is widely read as part economic strategy, part diplomatic reply—by reducing USD reliance, India seeks more policy space and trade resilience.
How it works:Banks will be allowed to open and operate Vostro accounts for foreign customers (subject to KYC). These accounts let foreign firms hold and move rupees for trade settlement without cumbersome approvals.
Immediate effects:Easier rupee settlements could increase demand for INR, add offshore rupee liquidity, and make imports/exports with friendly countries faster and cheaper—potentially nudging some trade away from the dollar.
Limitations & reality check:Practical adoption will take time—infrastructure, correspondent banking, FX liquidity and trust all need to scale.dollar’s dominance is deep and unlikely to vanish quickly;this is a strategic step, not overnight replacement.
Bottom line:
This RBI circular is a tactical, low-friction move that could accelerate rupee’s internationalisation—especially across BRICS and friendly partners.If adopted widely, it’s sort of quiet policy change that can slowly erode transactional dependence on US dollar and reshape regional trade corridors.
Credit: Watcher.Guru —“India Ditches USD, Sends Circular To BRICS Granting Full Rupee Access.”