India UAE explore EXIM Trade on domestic currency

After signing the free trade agreement six months ago India and United Arab Emirates have moved to the next stage of exploring the possibility of having the EXIM trade between them using domestic currencies bypassing the US dollars

Both the countries are in talks for a Rupee-Dirham-denominated bilateral trade, said Sunjay Sudhir, Indian Ambassador to UAE.

The arrangement if concluded will be beneficial to both the countries he was quoted by a news agency. The formal talks in this regard commenced two months ago.

India has shared a concept paper with UAE spelling out the modalities. The Central Banks of both countries are discussing. The objective is to reduce the transaction cost," the Indian Ambassador to UAE said.

This development followed the Reserve Bank of India's (RBI) announcement -- a mechanism to settle payments for international trade in rupees, especially for India's exports.

It is widely believed if the mechanism fructifies then it may go a long way in internationalizing the Indian currency rupee in the long run.