What making the rupee globally acceptable will require on India's part
RBI, which is supposed to have the last word on rupee? The letter made no difference. Punters had the last laugh. Those days, RBI either sharply reacted to such phenomena, or shut its eyes when there was nothing it could do — as it refused to acknowledge the flourishing non-deliverable forward (NDF) market in Singapore, London and New York where big banks took positions on `/$ forwards and settled the trade in dollars.
Rupee remained a closed currency. Even today, one can’t carry rupee bills of more than `25,000 abroad (except to Nepal and Bhutan where the currency is freely used). After fiercely protecting it for years, New Delhi and RBI now want more and more people across the world to buy, sell and hold the rupee.
What has changed? Well, everything. The hunt for an alternative global currency that would challenge the supremacy of the dollar began in 1999 with the launch of the euro, the seeds of which were sown in 1950 with the Treaty of Rome. The Eurosceptics were countered with the argument that Europe was more of a country than a continent.
That theory unravelled with the 2008 meltdown. While the euro remains an international currency, the inherent contradiction in an arrangement where disparate countries go for a monetary union (and single currency) but walk separate fiscal roads, some with absolute profligacy, was exposed. Today, the impulse to replace the dollar isn’t academic.
There is no simple deal that an army of finance ministers pontificating over liqueur and coffee can cut. After Washington’s sweeping move to weaponise the dollar to teach Russia a lesson, nations are aghast. What if the US freezes their dollar securities held as reserves and forbids them from using the SWIFT (Society for Worldwide
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