India, Tanzania discuss trade in local currencies

According to Dammu Ravi, Secretary for Economic Relations in the Ministry of External Affairs, during a press conference on Monday, India is looking into trading local currencies with Tanzania.

“We are exploring new areas of cooperation including in trade in local currencies. This is one of the topics discussed by the two leaders,” Ravi told reporters in the national capital.

The two leaders expressed a willingness to increase bilateral trade using local currencies earlier in the day, according to the joint statement that was issued following their discussion.

They pointed out that the Reserve Bank of India (Indian Central Bank) opened Special Rupee Vostro Accounts (SRVA) of correspondent banks in Tanzania, paving the way for trade using local currencies like the Indian Rupee (INR) and Tanzanian Shilling, and that transactions using this mechanism have already taken place.

“The two sides agreed to continue with the consultations in order to address any concerns so as to ensure the sustainability of this arrangement,” the joint statement read.

In order to conduct currency exchanges in local currencies, banks from other nations have set up unique Rupee vostro accounts in Indian banks. Simply said, vostro accounts allow domestic banks to offer worldwide financial services to customers that require them.

Last year, the Reserve Bank of India implemented a policy that permits transactions in domestic currencies in order to encourage the expansion of international trade, with a focus on Indian exports, and to raise interest in the rupee.

Samia Suluhu Hassan, the president of Tanzania, is in India on a state visit at the invitation of President Droupadi Murmu. A significant delegation was with President Hassan.

The two presidents declared the elevation of the Indo-Tanzania relationship to the level of “Strategic Partnership” with a view to further solidifying the bilateral ties and boosting collaboration across numerous areas. The strategic alliance, according to both parties, will enable the two nations to work together on matters like maritime security, defence cooperation, development partnerships, trade, and investment, among others.

Tanzanian cashew nuts, pigeon peas, spices, avocados, and other agricultural products continue to be sent to India in large quantities. Both parties decided to intensify their current level of collaboration in this area.

India alone exports USD 3.9 billion and buys USD 2.4 billion in 2022–2023, totaling USD 6.4 billion in bilateral commerce between the two nations. India is Tanzania’s fifth-largest investor, at roughly USD 3.7 billion in investments covering a range of sectors.

(With agency inputs)