The Reserve Bank of India's Inter-Departmental Group (IDG) recently expressed confidence in the Indian rupee's ability to evolve into a worldwide currency. This belief comes against the backdrop of India's continued economic growth and resilience in the face of significant challenges.
The previous year proved crucial for the Indian economy, with the global commodity market facing severe disruptions due to the war between Russia and Ukraine. As a result, the Indian rupee experienced significant pressure and crossed the 80-dollar mark for the first time. However, the Reserve Bank quickly devised a comprehensive plan to alleviate this pressure, and the results have been slow but steady progress.
Measures to Alleviate Pressure on the Rupee
One of the measures to relieve the pressure on the Indian rupee was the announcement of trading in foreign markets using the national currency. Despite ongoing efforts in this direction, foreign trading using the rupee has not yet materialized. Consequently, the plan is undergoing modifications. The RBI is actively establishing bilateral agreements with several nations, a move expected to pave the way for the rupee's acceptance in international trade.
The Reserve Bank has been tirelessly working to reduce the pressure on the Indian rupee in foreign exchange markets. To counter the rupee's depreciation, a record $39 billion (approximately Rs 2.8 lakh crore) worth of foreign currency was sold in July. Throughout the fiscal year 2022-23, the Reserve Bank had to sell a total of $213 billion (almost Rs 17 lakh crore) in foreign currency. In response to the challenging circumstances, the RBI decided to interact with overseas markets using the rupee and successfully implemented a digital currency release strategy. However, the impact of this decision remains to be seen.
Diligent Efforts to Stabilize the Rupee
The road to transforming the rupee into a globally recognized currency may be challenging, but India's strong economic growth and resilient spirit make it a feasible endeavor. As the country emerges as one of the fastest-growing economies globally, its potential to establish the rupee as an international currency becomes more promising.
In conclusion, the Reserve Bank of India's belief in the Indian rupee's potential as a worldwide currency, coupled with India's economic growth and resilience, presents a promising outlook for the rupee's future on the global stage. However, it will require continued efforts and strategic measures to make this vision a reality.