Can Rupee become a global currency?

Indian Rupee (INR) has often been cited as a volatile currency as it has historically struggled to keep itself consistent against the US Dollar. There has been a major downfall in its value over the last few decades, which has perpetually kept India’s foreign reserves under pressure, thereby limiting its global purchasing capacity. However, there has been a major global momentum to reduce the usage of the US Dollar, and India has been right at the front of this change. This turn of events naturally invites a critical question – does Rupee have the potential to become a globally accepted and traded currency?  

The spread of the Indian Rupee  

The last few years have brought about a major change in favour of the Indian currency, as it has been accepted by over 18 countries in the world, including Singapore, Germany, the UK, Kenya, and Sri Lanka, among others. Parallelly, India is also promoting the use of its Unified Payments Interface or UPI all over the world. Initially, UPI was designed to curb the monopoly of Visa and MasterCard in India in terms of online transactions within the country; but the system is now eyeing a vast global presence as well. Quite recently, UPI was launched in a country that is considered a global business hub – Singapore. This major development has made it possible for people living in India and Singapore to send each other money via UPI.  

At the same time, the ongoing Russia-Ukraine conflict has further sped up the process of moving on from the US Dollar. Over the past year of this war, the United States has made several unconventional moves to pressure Russia by not letting them use the US Dollar to purchase goods and services from other countries, which includes defence products. This move has forced Russia to find alternatives and make its purchases in different currencies. Countries like India and China have thus taken the initiative to enable their trade with Russia in their own respective currencies.   

India is also increasing bilateral trade with countries all over the world and working on Free Trade Agreements with many of them. This also presents us with an excellent opportunity to promote the Indian Rupee within these countries. All in all, the Indian Rupee is certainly making its way to the centre stage, but the decisions of today will decide whether Indian Rupee truly becomes a global currency or not.