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BUSINESS EYE NOVEMBER 24, 2023 | The Indian Eye 43

India should aim to become

middle-income country before

taking rupee global: Report

The Indian side has invited the Ethiopian side, the fastest growing economy in Africa, to
collaborate on the Unified Payment Interface (UPI) of India with Ethswitch of Ethiopia

OUR BUREAU both sides agreed to expeditiously
address all issues impeding bilateral
New Delhi/Washington, DC
trade and facilitate trade promotion
ndia should become a middle-in- between the two countries.
come country and then push to The Indian side invited the Ethi-
Imake INR (rupee) a hard curren- opian side to collaborate on the Uni-
cy, and till then, it must promote the fied Payment Interface (UPI) of India
settlement of global trade in the local with Ethswitch of Ethiopia. Further,
currency, think tank GTRI said on the Indian side also urged Ethiopia to
Sunday. Global Trade Research Ini- explore the possibility of settlement
tiative (GTRI) said that transforming of trade transactions in local cur-
a currency into a hard currency is a rency which will help boost bilateral
complex process that hinges on sev- trade and conserve foreign exchange.
eral pivotal factors. “The deliberations of the 6th
Firstly, economic stability is Sessions of India-Ethiopia JTC were
paramount; a country must exhibit cordial and forward-looking, reflect-
low and stable inflation, consistent ing the traditionally friendly and
growth, and a balanced trade envi- special relations between the two
ronment. This stability underpins countries,” the commerce ministry
confidence among international in- release said.
vestors and trading partners, it added. Both sides undertook a detailed
Equally crucial is the implemen- Developing deep and liquid forex markets is critical to managing large-scale currency conver- review of recent developments in
tation of strong fiscal and monetary sions without significantly impacting the rupee’s value (File photo) bilateral trade and investment ties
policies by the government and cen- and noted that the relationship has
tral bank, including effective nation- a huge potential to be scaled up even
al debt management and sensible benchmark currency for most com- little can lead to either artificial valu- further. To this effect, both sides
interest rate policies, it said, adding modities. ations or high volatility, respectively. identified several areas of focus for
aspiring for reserve currency status is Some of the most recognised Local currency trading would re- enhancing both bilateral trade as well
a significant aspect. hard currencies and their approxi- duce transaction costs by eliminating as mutually beneficial investments.
This status is typically achieved mate global share in international the need to convert currencies twice. These include health and phar-
when a currency is widely used and transactions and reserves include US For example, an Indian company maceuticals, automobiles, textiles,
trusted, and reciprocally, it gains Dollar (60 per cent), Euro (20 per importing machinery from Russia infrastructure projects, food and
trust because of its widespread use. cent), Japanese Yen (5-6 per cent), would currently need to buy dollars, agro-processing and so on. Both
Political stability also plays a critical British Pound Sterling (4-5per cent), incurring a premium, and then the sides also reviewed the progress
role, as it reassures external entities Swiss Franc (1 per cent), Canadian Russian counterpart would convert of ongoing discussions for Memo-
of the nation’s economic consistency, Dollar (2-3 per cent) and Australian these dollars into Russian Roubles, randum of Understanding (MoUs)
the think tank said. Dollar (2-3 per cent). again incurring a conversion cost. in the field of Standardization and
Hard currencies are widely ac- Currently, the rupee’s interna- Recently, the 6th Session of the Quality assurance and Customs pro-
cepted around the world for inter- tional trade role is limited, especially India-Ethiopia Joint Trade Commit- cedure and agreed to conclude them
national transactions and are con- when compared to established hard tee (JTC) was conducted in Addis expeditiously. The Indian side also
sidered a reliable and stable store of currencies like the US Dollar, Euro, Ababa, Ethiopia earlier this week, requested the Ethiopian side to ex-
value. The presence of a currency as or even the Chinese Yuan, it said. co-chaired by the Economic Advisor, pedite the early finalization of the
a hard currency reflects perceived Additionally, developing deep Department of Commerce Priya P Bilateral Investment Treaty.
stability, reliability, and economic and liquid forex markets is critical to Nair and the Lead Executive of the Ethiopia is one of the fast-
strength of its issuing country. managing large-scale currency con- International and Regional Trade est-growing economies in the Afri-
The US Dollar is the most domi- versions without significantly impact- Integration, Ministry of Trade and can region, with an estimated growth
nant hard currency, often considered ing the rupee’s value, Srivastava said, Regional Integration, Ethiopia, Tag- of 6.4 per cent in the year 2021-22.
the world’s primary reserve currency. adding that this requires maintaining es Mulugeta. Bilateral trade between India and
It is used in a significant majority of a fine balance in exchange rate man- As per a release issued by the Ethiopia stood at USD 642.59 mil-
international transactions and as a agement; excessive intervention or too Ministry of Commerce and Industry, lion in 2022-23.

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