Context: In its attempt to take the rupee global, India is in talks with Lesotho to conduct trade using the Indian currency.
India and Lesotho Rupee Trade
- India is currently engaging in discussions with Lesotho to facilitate international trade using the Indian rupee, as part of its efforts to promote the currency on a global scale.
- This will aid the ongoing trade negotiations with the Southern African Customs Union (SACU).
- SACU is a five-nation grouping of Botswana, Eswatini, Lesotho, Namibia and South Africa
Rupee as Hard Currency
- Direct trade in Indian Rupee will reduce the risk of conversion, and help elevate the Indian Rupee to the status of hard currency.
- Benefits: Help save the foreign exchange reserves.
About Lesotho
- Lesotho lies entirely within the territory of South Africa.
- Lesotho is called the “Kingdom of the Sky”.
- Thabana Ntlenyana is the highest point of Lesotho.
- It is in the Southern and Eastern Hemispheres of the Earth.
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- Help the inclusion of Indian Rupee in the International Monetary Fund’s special drawing rights basket.
- It will also help lower the cost of financing for India.
- Present Status: Presently, around 22 countries have so far set up special bank accounts to trade in Indian rupee, including Malaysia, Sri Lanka, Germany, Maldives and the UK and SACU.
What is Hard Currency?
- Hard currency refers to money that is issued by a nation that is seen as politically and economically stable.
- Hard currencies are widely accepted for payment for goods and services and may be preferred over the domestic currency due to its stability.
Read More About: Internationalization of Rupee
News Source: The Mint
19 Dec 2023
