Conditions not ripe to make INR a hard currency: GTRI
India should become a middle-income country and then push to make INR (rupee) a hard currency, and till then, it must promote the settlement of global trade in the local currency, think tank GTRI said on Sunday. Global Trade Research Initiative (GTRI) said that transforming a currency into a hard currency is a complex process that hinges on several pivotal factors.
Firstly, economic stability is paramount; a country must exhibit low and stable inflation, consistent growth, and a balanced trade environment.
This stability underpins confidence among international investors and trading partners, it added.
Equally crucial is the implementation of strong fiscal and monetary policies by the government and central bank, including effective national debt management and sensible interest rate policies, it said, adding aspiring for reserve currency status is a significant aspect.
This status is typically achieved when a currency is widely used and trusted, and reciprocally, it gains trust because of its widespread use.
Political stability also plays a critical role, as it reassures external entities of the nation's economic consistency, the think tank said.
Hard currencies are widely accepted around the world for international transactions and are considered a reliable and stable store of value. The presence of a currency as a hard currency reflects perceived stability, reliability, and economic strength of its issuing country.
The US Dollar is the most dominant hard currency, often considered the world's primary reserve currency. It is used in a significant majority of international transactions and as a benchmark currency for most commodities.
«The process requires significant systemic changes, which could, potentially,
