Internationalisation Of Rupee To Spur Easier Trade With Other Nations: RBI's Former Deputy Governor

Usha Thorat said that India is not aspiring to make the rupee a reserve currency, but is trying to make the rupee easier to be a currency of transaction and payments

Usha Thorat, former deputy governor of RBI, said the role of an international reserve currency is best met by the dollar as it's convertible and has a dominant position.

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India’s efforts to internationalise the rupee are aimed at easing trade settlements with other nations, rather than contributing to de-dollarisation, a former Reserve Bank of India official told Bloomberg. Usha Thorat, a former deputy governor, said in an interview with Bloomberg, "India is not aspiring to make the rupee a reserve currency. India is trying to make the rupee easier to be a currency of transaction and payments."

According to the Bloomberg report, the world’s fastest-growing major economy is trying to use the rupee for its global payments to cut its dollar demand and also offer the local currency as a trade settlement alternative to countries facing a shortage of the greenback. The move can help the nation’s trade and businesses from exchange risks.

The role of an international reserve currency is best met by the dollar as it’s convertible and has a dominant position, said Thorat who was at the central bank for five years until 2010, serving as in charge of the local currency markets. India, which runs a current account deficit, has to finance it with accumulated reserves.

"India's share of global trade, both exports and imports, is around 7 per cent,” said Thorat. “Similarly the share in financial flows is also around the same. It will take a long time for India to get a dominant position in global trade.”

On Tuesday, the Centre appointed State Bank of India (SBI) Managing Director Swaminathan Jankiraman as Deputy Governor (DG) of the Reserve Bank of India (RBI). According to an official notification, the appointment is for a period of three years from the date of joining the post of Deputy Governor or until further order.

A Cabinet Secretary-headed panel interviewed shortlisted candidates on June 1 for the post of the RBI Deputy Governor in place of MK Jain, completing his extended tenure on Tuesday. One post of Deputy Governor is reserved for a commercial banker.