Trading gains

Rupee settlement will increase flexibility

The Reserve Bank of India (RBI) has done well to allow international trade settlement in Indian rupees. This will give importers and exporters another option to settle payments. The central bank on Monday announced all imports and exports under the new framework could be denominated in rupees. The exchange rate with the trading partner will be market-determined. Accordingly, for settling trade, Indian banks have been allowed to open special Vostro accounts in banks of the trading-partner countries. Thus, Indian importers will be able to make the payment in rupees, which would be credited to the special account in the trading-partner