Time ripe to explore steps to internationalise rupee: RBI ED

Reserve Bank of India

India remains a bright spot in an otherwise grim world economic scenario and internationalisation of rupee is the natural step forward, Reserve Bank of India Executive Director Radha Shyam Ratho said on Tuesday. However, the path towards internationalisation may not be smooth as it entails navigating many hurdles over a long period of time, Ratho said.

"Incidentally, the global geopolitical climate in the recent years has ushered in a mounting need for countries to undertake currency diversification to minimise vulnerabilities resulting from the weaponisation of the hard currencies (dollar)," he said. Ratho said in contrast to the global economy which is facing "mega threats", the Indian economy is currently going through "Goldilocks moment" and has exhibited unique resilience in last 3-4 years despite unfavourable external shocks.

"As such, the time is ripe to explore various measures required to internationalise the Indian rupee to further the broader aspect of Aatmanirbhar Bharat," Ratho said at the Banking and Finance Summit organised by the CII. Such a move of internationalisation of rupee can deepen our financial markets, allowing domestic firms to transact in their own currency internationally, besides mitigating exchange rate risks for our exporters and importers, Ratho said.

Access to global financial markets at lower costs, a more robust financial sector, and reduced dependence on foreign exchange reserves collectively contribute to increased capital formation, fostering growth, and mitigating external vulnerabilities, the RBI ED added.