International Journal of Business and Economics Volume 23, No. 2 September, 2024

Exploring India’s Central Bank Quest for De-Dollarization

Ram Singh

Professor & Head (CDOE), Indian Institute of Foreign Trade, New Delhi, India

Aaqib Chaudhary

Research Scholar, Indian Institute of Foreign Trade, New Delhi, India

Mahender Kumar

Research Scholar, Indian Institute of Foreign Trade, New Delhi, India

Abstract

The economic sanctions have stirred the entire trade, financial, commercial, and economic architecture, prompting a chorus call to find-out an alternative currency to trade. The global geo-economic landscape is witnessing a change with emerging markets coordinating their policy and operational interventions. The predominance of the dollar is challenged with trade in local and alternate currencies. India, with its rising geo-strategic status, is exploring newer methods and instruments to settle international payments. These include trading, exchanging, and settling international trade transactions in Indian rupees (INR), promoting digital means like the Unified Payments Interface (UPI) for global trade and commerce, and introducing digital currencies to safeguard national interests. The paper discusses the challenges before India for the internationalization of its INR. All these initiatives are aimed at bypassing sanctions thus leading to de-dollarization in the world economy. The paper elucidates India's quest for alternatives and to de-dollarize in the context of the evolving global geo-economic landscape and concludes it may achieve limited access in the absence of required economic fundamentals.

Keywords：De-Dollarization, Economic Sanctions, Rupee Payments, International Reserve Currency

JEL Classifications：F31, F36, O24

BACK