UAE Plans to Trade with India in Local Currencies

Date:

Clarion India

DUBAI – The UAE and India are coming up with a trade deal that will allow businesses to trade in local currencies.

India’s ambassador to the UAE Sunjay Sudhir said the UAE Central Bank is in discussion with the Reserve Bank of India to develop a trading mechanism that will encourage bi-lateral relations between the two well-established partners.

During a typical trade, importers and exporters lose money during a currency exchange.

a mechanism which will allow a percentage of trade to be covered direct through dirham-rupee transactions.

“India has prepared a concept paper (regarding rupee-dirham trade) and has shared it with the UAE,” said Sudhir.

“UAE’s central bank has already designated a nodal person for this. The discussion is now going on between the central banks…[it] will be seen how in a realistic scenario, the whole concept can be operationalised.”

Sudhir added that the objective is to reduce the cost of transaction and said the idea is not to have trade using a third currency.

The finance ministers of the two nations met to discuss mutual cooperation on the side-lines of a G20 summit in Washington last month.

At the meeting between Mohamed bin Hadi Al Hussaini, minister of state for financial affairs, and Nirmala Sitharaman, minister of finance and corporate affairs, the two sides also deliberated on the priorities set by India in its upcoming G20 Presidency and the ways the UAE can support these priorities.

The country and the UAE signed a free trade agreement earlier this year and hope to see $100bn bilateral trade in the next five years.

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