Direct Indian Rupee – UAE Dirham Trade Settlement Available Soon
Trade settlements in Indian rupees and UAE Dirhams will soon be possible and is expected anytime soon as senior finance and bank officials from India are on a three-day trip to Abu Dhabi now, finalising the details of the arrangement.
Once effective, the transaction costs for exporters and importers will be reduced – a boost to UAE-India importers, exporters, and traders. It will mean that both will circumnavigate the use of the US Dollar and Euro, which have become increasingly mistrusted due to the political weaponizing of the global SWIFT banking network. The switch to local currencies from the US Dollar will also result in savings of foreign currency conversion fees and enable an easier flow of capital.
The direct currency trade option is significant for both as the UAE is India’s third largest trading partner after the United States and China. Talks are apparently at an “advanced stage”, with MoU on the deal signed in March. Any deal would be announced by the leaders of the two countries.
A concept paper on rupee-dirham trade was prepared by India and shared with the UAE last year, while the UAE’s central bank has already designated a nodal person for the trade settlement mechanism.
India and the UAE also signed a free trade agreement (FTA) in May last year, with bilateral trade up 10% in the year to date since.
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